/ 





SOME ECONOMIC ASPECTS OF MOTOR TRUCK 
TRANSPORTATION 



By 

AUDLEY EVERETT PATTON 

B. S. University of Illinois, 1921 



THESIS 



SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENTS 
FOR THE DEGREE OF MASTER OF SCIENCE IN BUSINESS 
ORGANIZATION AND OPERATION IN THE GRADUATE 
SCHOOL OF THE UNIVERSITY OF ILLINOIS, 

1922 



URBANA, ILLINOIS 



Digitized by the Internet Archive 
in 2016 



https://archive.org/details/someeconomicaspe00patt_0 



UNIVERSITY OF ILLINOIS 






THE GRADUATE SCHOOL 









1 HEREBY RECOMMEND THAT THE THESIS PREPARED UNDER MY 




BE ACCEPTED AS FULFILLING THIS PART OF THE REQUIREMENTS FOR 




Recommendation concurred in'* 



Committee 

on 

Final Examination* 



•Required for doctor’s degree hut not for master’s 











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TiiBLE OF COITTENTS 



page 

CEAPTER I - DITEOEUCTIOIT 1 

CHAPTER II - A SURVEY OP THE MOTOR TRANSPORTATION INKISTRY, - ITS 

METHODS AND POLICIES 4 

THE DEVELOPMENT OF MOTOR TRUCK TRANSPORTATION. .... 5 

preliminary survey of the field 9 

REASONS TOY ACCURATE TRUCKING COSTS SHOULD BE KEPT. . . 17 

EXPENSE ITEMS PROPERLY ENTEPJNG INTO COSTS 22 

NEED FOR UNIFORM SYSTH\1 OF ACCOUNTS 37 

CHAPTER III - THE MOTOR TRUCK AND THE RAILROAD - PRESENT AND FUTURE. . . 44 

DEFINING THE DIFFERENT TYPES OF SERVICE 45 

^SEVERAL FAXTORS AIDING THE EXPANSION OF MOTOR TRUCKS 

IN FREIGHT SERVICE 52 

' THE SHORT-HAUL 

'FACTORS TO BE CONSIDERED IN A COMPARISON OF TRANS- 
PORTATION COSTS 59 

coivIpaeison of transportation costs 62 

THE MOTOR TRUCK AND THE RAILROAD 68 

-THE I4AINTENANCE-OF-WAY OR MOTOR TRUCK TAJXATION PROBLIM. 76 

THE TREND OF LEGISLATION 83 

OTHER FACTORS TENDING TO LIMIT THE DEVELOPMENT OF 

MOTOR transportation 86 

CHAPTER IV - CONCLUSION 9 I 

APPENDIX 95 

BIBLIOGRAPHY 97 




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iirpRonucTiQu 

At the present time there is more or less concern as to what place the 
motor truck is to have in our national transportation system, and in our national 
life. The motor truck is being critically compared with the steam and electric 
railways both for passenger and for freight service. 

The progressive shippers are interested in knowing which of the trans- 
portation agencies offer the best service, and, all aspects considered, the 
cheapest carrying charges to their particular businesses. 

The actual and prospective motor truck operators are Interested in the 
advantages their service can offer; the economic range of their operation; and 
finally, in the future outlook and probable tendencies of the motor transporta- 
tion industry. 

The railroads are, of course, interested in knowing the advantages of 
each of the transportation factors, and their least as well as their most profit- 
able fields of operation. The railroads want to know whether the motor truck 
is to become a serious con^etitor of their lines or an economical supplement that 
should be welcomed and encouraged. 

There are a number of problems to be worked out. This thesis is, 
hov/ever, limited to a discussion of the motor truck engaged in what is comconly 
known as long-distance, frei^t transportation. The exaii5)les and problems of 
the emergency services often performed by the truck are eliminated, and only 
those services performed by trucks attempting to do a regular freight business, 
especially in competition with the railroads, are discussed. Some of the 
causes of the failures of motor truck lines are reviewed, and the weaknesses of 
a number of the present methods of existing lines are pointed out. The im- 
portance of conflate, adequate and accurate cost records and their use as a fair 

basis for determining rates is discussed at length. As accurate a limit of 







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economic, long-distance truck operation as is possible nnder all of the varying 
conditions is pointed out, and the relative fields of operation of the railroad 
and the motor truck are discussed with the idea of showing that there is neces- 
sarily competition between them, but if each will confine itself to its most 
profitable fields of operation, the tendency is away from competition towards 
co-operation* And finally, a number of the inanediate and future problems of 
the motor truck operator are discussed along with suggestions as to how some of 
the problems may possibly be met. 

No attempt is here made to specify accurate cost figures that are 
applicable in all territories and under all conditions, but rather to point out 
those eatpense items that must be considered in arriving at accurate costs, with 
special emphasis upon those cost items that are most often omitted. The cost 
of operating five- ton trucks form the basis of all comparative figures. Pre- 
caution is exercised in this study against over-enthusiasra or any bias of 
opinion. An attempt is imade at an open, fair-minded analysis and discussion 
of the facts and tendencies in the proper business sense. 



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THE DEVELOPMENT OF LK)TOR TRUCK TRfiKSPORTATION. 



The past few years have witnessed the motor truck entering the com- 
mercial and industrial fields with remarkable rapidity. As a medium for the 
carriage of freight the truck is rapidly assuming an in^^ortant place in our 
general scheme of transportation. 

In 1903 there were no motor trucks. In 1904 there were 411 pro- 
duced. Six years later the production had grown to 9,500; while in 1920 the 
output amounted to 370,000 trucks.^ 

The following table shows the production of motor trucks from 1910 
to 1921 and gives some idea of the growth of the industry.^ 



1910 

1911 

1912 

1913 

1914 

1915 

1916 

1917 

1918. 

1919. 

1920. 

1921. 



. 9,500 

. 16,000 
. 25,000 
. 28,000 
. 35,000 
. 74,000 

98,000 

190.000 

250.000 

305.000 

370.000 

150.000 



The number of motor trucks in use in this country increased from 



351,000 in 1918 to 480,000 in 1919. This number, according to some writers, 
was increased to 674,300 in 1920.® The United States Bureau of Public Roads 



places the number for that year at 841,690.^ According to tables compiled by 



the Automotive Industries of New York, quoted in the February 2, 1922 issue of 



Lane, F. Van Zandt. Motor Truck Transportation. Preface p. II 
^gineerlng News-Record . Vol. 85: 462. Sept. 2, 1920. 
Engineering News-Record . Vol. 84. 1920. 

Engineering News-Record . Vol. 86: 683. Apr. 21, 1921. 



6 



Motor Age, the nomher of trucks in use in 1921 had increased to 958,295.^ 

Mr. F. Van Zandt Lane, in his new hook "Motor Truck Transportation" states that 
there are about 900,000 trucks in service today.® The Denver Post, without 
giving authority for its figures, places the numher at approximately 1,000,000. 

In February 1922 the American Society of Civil Engineers placed the number of 
motor trucks in use at that time at 1,333,000.^ Between 1910 and 1921 trucks 
increased from 2.8 percent to 10.3 percent of the total motor vehicles in use.® 
The figures of the American Society of Civil Engineers indicate the 
investment in highway transport to be $20,000,000,000.00 outside of cities, in- 
cluding vehicles, garages, and roads, an investment equal to that in rail trans- 
portation. The motor vehicles represent an investment of $10,000,000,000.00® 

In March 1919, according to the figures of the National Automobile 
Chamber of Commerce, 600 motor truck frel^t lines were operating in this country; 
150 of which were operating in the State of California. By the end of that 
year the zxumber had Increased to 1,956.^^ By December 1920 the number Vif 
grown to 2,949, a gain of nearly 51 percent over 1919.^ The exact figures for 
1921 are not yet available, but the New York Evening Post believes that the num- 
ber early in that reached approximately 10,000 some of which have invested as 
high as $2,000,000.00 in their trucking equipment.^ 

The average fleet of five trucks involves an investment of $30,000.00 
and there are 20,000 such fleets in this country at the present time.^^ 

5 Motor Age. Vol. 41: 97. Feb. 2, 1922. 

6 Lane, F. Van Zandt, Motor Truck Transportation . Preface p. III. 

7 ^ . erican ^ Society of Civil Engineers . Proceedings . Vol. 48: 356. Feb. 1922. 
o Ibid . 

9 Ibid . 

10 American Magazine . Vol. 87: 18-19. Mar. 1919. 

11 Good Boads . New Series Vol. 21: 302. June 8. 1921. 

12 Ibid . 

13 New York Evening Post . Dec. 4, 1920. 

14 McIntyre, Lewis W. Preliminary Topical Outli ne of the Economics of Highwav 
Transport , p. 17. 
















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During 1918 the railroads of this country transported 2,504,000,000 

tons of freight traveling a total distance of 259,000 miles. In the seme year 

motor trucks carried 1,200,000,000 tons, with a total mileage of 2,753,333 miles. 

The Great Lakes and Mississippi River carried 90,000,000 tons.^® In the year 

1919, three hundred million tons of material were carried hy motor truck, with 

a total mileage of 4,695,000,000 and a valuation of $360,000,000.00.^® In 1921 

it is estimated that the tonnage amounted to 1,200,000,000 tons.^*^ Without 

giving the tonnage figures, the Commercial and Financial Chronicle declares that 

motor trucks now carry more tonnage than either Inland watermys or interurhan 

trolley lines. Motor transport now ranks second only to rail transportation.^® 

In approximately a dozen years* time motor transportation has grown from nothing 

to its present prominence. A concrete example of the remarkable growth is had 

in a check taken of traffic between Akron and Cleveland, Ohio. Between 1919 

and 1921 the loaded truck tonnage Increased approximately 200 percent. These 

truck lines release an average of 600 freight care a week or 30,000 cars a year 

which during the recent frel^t congestion amounted to that many cars saved for 
19 

other purposes. 

Mr. F. W. Fenn, Secretary of the Motor Truck Committee of the 
National Automobile Chamber of Commerce said that trucks have been \ised to carry 
cargoes which include everything from butter to buttons, and from castings to 
live calves However, the cargoes of those companies operating regular 



15 McIntyre, Lewis W. Preliminary Topical Outline of the Economics of Hlp-Wv 

toansport . p. 17. ® ^ 

16 New York Times. Motor Trucks as Freight Carriers. Nov. 11, 1921. 

17 National Automobile Chamber of Commerce. Good Roads and Mo Ur Transportation . 



18 Commercial and Financial Chronicle . 

19 American Magazine . Yol. 87; 18-19. 

20 Ibid . 



Yol. 113; 1116-18. Sept. 10, 1921. 
Mar. 1919. 



8 



frel^t lines In competition to the railroads are usually made up of the more or 
less ea^enslve, high class or fragile articles liatle to perish or shrlnliage. 

The freight rates are usually so hi^ and the perishahility of so many of these 
articles so great, that the motor truck can conqjete successfully with the rail- 
roads in handling them over short distances in less- than-car load lots. More 
satisfactory schedules and speedier service to market are two of the most out- 
standing advantages the truck offers in handling these goods. Foodstuffs such 
as “butter, eggs, cream, milk, fruit, vegetables, etc. compose a goodly share of 
the freight hauled by truck lines. In addition they carry such articles as 
finished leather, moving picture films, clothing, woolen goods, textiles, 
musical instruments, Tictrola records, yams, machinery, etc. 

In 1919, fifteen truck lines operating into Baltimore carried into 
that city a hundr ed tons of food every day. In the same year a truck line 

operating in New York State supplied the City of Albany with a million and a 

21 

quarter quarts of milk. Daring the year 1921, six million head of live stock 

were transported to market by motor truck. 

Of the total receipts of driven-in hogs at the St. Joseph stockyards 

in 1917 approximately 10 percent were hauled to the yards by motor truck. 

^ile the driven-hog receipts at this same yard during 1918 were twice those 

of 1917. Forty percent of this total was driven in by truck. In 1920, 60 

23 

percent of the driven-ln hog receipts were truck hauled. 

At the Cincinnati stockyards in 1919, 95 percent of all livestock 
delivered to that yard other than by freight car came on motor trucks. In 1920 
virtually all driven- in receipts were truck-hauled. The conditions are 
21 Americpn Magazine. Vol. 87: 18-19. Mar. 1919. 

32 Anerican Society of Civil Engineers . Proceedings . “Vol. 48: 356. Feb. 1922. 

33 Firestone Tire and Rubber Co. Firestone Ship-by-Truck Bureau. 

Marketing Live Stock ^ Motor Truck , p. 6. (Its Bulletin No. 8.) 













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practically the same at Ocoalxa and at Indianapolis* At 1)otli Cincinnati and 
Indianapolis on an average day 100 trucks can “be seen coming into the yards, 
while as many as 300 trucks have been counted at Cincinnati in one day and as 
many aa 450 at Indianapolis.^ 

The greater part of these trucks are not owned hy the farmers thaa- 
selves, hut hy small operators who live in the small towns and who devote a 
greater part of their time to trucking, holding thanselves ready to for 

pc 

anyone at any time to any place at an agreed price* 



PEELE^IHARY SURVEY OF THE FIELD. 

"Owing to the inadequacy of railroad shipping facilities, motor 
trucking has received an unlooked-for impetus in the past few years, Hor will 
the ultimate in^rovements of the railroads interfere materially with the truck- 
ing business, since those in^jrovements will be confined to that part of their 
business which is the most remunerative. It so happens that the very business 
which proves a revenue loser for the railroad, proves to be a revenue producer 
for the motor truck. Due to the abandonment of u 25 )rofltable short lines the 
total railway mileage in the United States has been slowly but steadily de- 
creasing during the past four years The territories formerly served by 

24 Firestone Tire and Rubber C4. Firestone Ship-by-Truck Bureau. 

M^rtotlng Live Stock bjr Motor Truck , p, 6. (Its Bulletin Ho, 8.) 

26 Ibid. 

26 According to the figures of the Interstate Commerce Commission, published 
in the Railway Age, the total single track railway mileage of the United 
States on January 1, 1919, was 253,626 miles. In 1919, 689 miles of line 
were abandoned and 686 miles of new line built. 1919 was the third year 
in succession in which the mileage of railways abandoned had exceeded the 
mileage of new lines built. During the three years from 1917 to 1920 
operation was abandoned on 3,319 miles of line, while only 2,386 mlles*in 
extensions, branches, and new lines were completed and placed in service. 
During those years the decrease amounted to 933 miles, and was not centered 
in any one railroad district, but was shown in all three districts— the 
eastern, southern, and western. — Lane, F. Van Zandt. Motor Truck 
Transportation , p. 68, 









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these short lines cannot he abandoned. They most have service. Other sections 
which have hitherto had inadequate service are clamoring for better service. 

Then too, many new production areas have been developed in the past ten years 
which are without railroad transportation and which must have a speedier and 
more intense form of transportation than horse-drawn vehicles afford. Trans- 
portation by motor truck seems to be the most promising economic mediiam. 

It was to be ejected that the motor truck would find its greatest 
usefulness in helping to solve the "short-haul", one of the most difficult 
problems which has confronted transportation esperts during the last decade.^® 

The trouble has been that without accurate knowledge of facts too 
many concerns have not given enough thought to what the term "short-haul" means, 
nor have they attempted to analyze it and deteraine the economic limit of truck 
operation. 

The equipment with few exertions has not been suitable for the re- 
quirements for efficient service; the rates have not been made from the exact 
knowledge of operating costs; have not been properly classified as to insure 
fair retiims on the investment, and leave a replacement fund for renewals.^® 

If the trucking industry is to progress and take its place in the transportation 
scheme, it must be developed on a sound, economic and businesslike basis. 

Too many beginners have delayed a canvass of their field of operation 
until they have been definitely conmltted to the establishment of a motor route 
by an investment of funds. Such a beginning is decidedly an unwise one. 

Many an optimistic viewpoint has bean changed by a closer scrutiny of the business 

37 Firestone Tire & Bubber Co., Akron, Ohio. Firestone Shlp-by- Truck Bureau. 

^e Ri^atlon o£ Costs ^ Motor Truck Transportation , p. 1. (Its Bulletin 
Uo. 5.) 

28 U. S, Dept, of Agriculture. Motor Tranapor tation for Rural Districts, 

p. 1. (Its Bulletin No. 770.) 

29 100^; t]^ Practical Magazine of Efficient Mpiap;amewt . Dec. 1921. 

p. 124. 




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essentials which must he considered when a freight route is estahlished. It is 
very desirable, in fact almost necessary, that a thorough business survey be 
made in advance by the prospective operator. In the first place, an investiga- 
tion may disclose the fact that it is unnecessary or undesirable to start the 
route at all. Secondly, a proper investigation may materially modify preliminarj 
plans, particularily with respect to the investment of funds and the selection 
of equipment. Enthusiastic but inaccurate reports which have been given wide 
circu l ation in many districts, have been responsible for soma amateur beginnings 
which should never have been undertaken. The motor route which has a chance 
for success must be founded on a careful business analysis of the field of 
operations . 

There are several sources of information which may be helpful to the 
man who conten^plates starting a truck line. Previous personal experience and 
Intelligent investigation of facts are exceedingly valuable. Es^eriences of 
other successful or unsuccessful operators may be secured by asking. Motor 
truck manufacturers will be glad to furnish prospective j^urchasers with such in- 
formation of this nature as may be available. jData secured from truck manu- 
facturers often do not indicate the conditions under which the figures were se- 
cured. Information thus offered is usually an honest attanpt to aid buyers, 
but almost invariably there is too much generalization to make such figures a 
reliable basis of estimation. Many cost statements issued by truck coa^^anies 
do not take into consideration the varying classes of highways over which the 
trucks run, variations in the load, total monthly or yearly mileage, expenses 
of management, rent of office, advertising and other important factors. There 
is a tendency to submit data secured under unusual or ideal circumstances and 
thus rendered valueless to the operator who must run his trucks under conditions 




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over which he has little or no control.^ 

The motor truck operator must study the roads orer which his trucks 
are to operate. He must know the character of the roads; their all-year-round 
conditions, including bridges, snow removal, grades, etc. It is believed that 
few operators realize the increased expense which results from travel on poor 
roads. Where the roads are smooth and hard the operating expenses will be much 
less than where the roads are soft and practically inpassable at different 
times during the year. ^The dependability and regularity of the service will 
d^end to a largo extent upon the roads . 

The location and length of proposed routes should be studied with re- 
spect to the towns to be included; the total distance to be covered; the 
location of terminals; and the logical location for route headquarters. The 
operator whose daily mileage is high must eaqject that his daily operating ex- 
penses will be correspondingly high. 

The potential 8i:pply and the probable amo\mt of business that could 
be obtained should be thorou^y investigated. Who would furnish the bulk of 
the business— the famers, the manufacturers, the merchants, or the wholesalers? 
Do these people seem inclined to favor the opening of a motor truck lino and do 
they seem inclined to pledge business? What amount of business, and in v^t 
coamodities, could be obtained in winter? In sumaer? The quantity of business 

30 U. S. Dept, of Agriculture. Motor Transportation for Dural matricsts. p. q, 

(Its Bulletin No. 770.) 

31 According to experiments carried on by the White Conpany, a 2-ton truck 
operated over concrete or brick pavements could get 11.5 miles per gallon of 
gasoline, whereas on the average earth road only 5.8 miles to the gallon was 
obtainable. - Highway I^^ineer and Contractor . Vol. 2: 38. Apr. 1920. 

It is evident that the poorer roads cause greater wear and tear than do 
the good roads. It is also true that it takes more time to make a given 
motor truck trip over poorer roads than over good roads. This lengthened 
time Increases the operating costs such as drivers' wages and expenses; 
it causes the overhead costs to be distributed over fewer trips within a 
given time and consequently increases the cost of each trip. 










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"by months should he estimated. The nature of agriculture along the routs should 
he studied. A very important item is the question of the return load. Is it 
possible to get shipments both directions or will the predominance of traffic he 
in one direction? Of what would the return load consist?^^ 

Consideration should he given to the nature of the products that will 
he hauled. Low-priced, bulky staples may not stand the transportation charges 
necessary to maintain a motor route. For instance, it is rather doubtful that 
hay or coal can he carried by motor truck for long distances except under un- 
usual conditions with respect to price. Perishables may stand the motor tariff 
if the service to market is speedier than the customary service. Commodities 
like cream, milk, eggs, butter, dressed meats, etc. which are high in price as 
cornpared to bulk may bear a reasonably hi^ transportation charge if more satis- 
factory facilities are offered. 

It is essential to determine whether or not conditions are normal in 
the territory to be served by the proposed route. Will the territory support 
the proposed route when rail service is normal? Does there seem to be any 
reason why the route should not be permanently profitable? The sentiment of 
the district under consideration often throws light on this subject. What 
persons or concerns seem to be most interested and why? Is private capital 
willing to contribute toward an es^erlmental service? 



32 Of fifty-seven operators hauling live stock into Omaha, 66 percent seldom 
had a return load, 10 percent had a return load half of the time, four per- 
cent usually and three percent from one- third to one-fourth of the time. 

At Cincinnati, out of forty operators interviewed, only three always carried 
return loads. At Indianapolis, out of forty interviewed, nine always 
carried return loads and twenty- two seldom did. — Firestone Tire and 
^bber Co. Firestone Ship-by- Truck Bureau. Marketing Live Stock bv Motor 

Trask, p. 16. (Its Bulletin No. 8.) ^ 

rr ... estimated that 70 percent of the trucks operating in the 

U^ted States during 1918 traveled empty one way. From these figures 
it was estimated that there was a capacity waste of 283,500,000 tons during 
the year. - Good Eoads . New Series Vol. 18: 167. Oct. 1, 1919. 






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TOiat are the lavra and ordinances regulating speed and weight of 

trucks and what are the regulations as to bonds, and licenses? 

The motor truck operator usually finds that he must con^iete with 

ejq>ress companies, railroads, electric interurban lines, boat lines or other 

motor truck lines that are already in the territory* It is a very unwise 

policy to disregard the competitor who is already in the field. Particular 

attention should be given to rates, schedules, and delivery arrangements. 

Some operators have found it possible to compete successfully with rail service 

and still charge higher rates. Such a condition is possible only where the 

truck operator is able to afford a superior service such as effecting direct 

delivery from shipper to consignee with no intermediate delivery charges.^ 

Frei^t and express schedules in some territories have been unsatisfactory to 

the shippers and by offering a more prompt and speedy service, operators have 

often secured for themselves a very satisfactory tonnage that usually moves by 
34 

rail. 

It should be determined who these carriers are and what schedules 
they maintain as well as what rates they charge. The minimum, maximum and 
average haul to loading stations should be figured and their delivery arrange- 
ments should be conpared with the proposed arrangements. The number and 
location of loading points should be decided upon. A sound method of collect- 
ing transportation charges must not be neglected. The policies of deliveries 
at both city and country points should be set. The number and capacity of 
trucks that would probably be needed should then be estimated, and finally 
the time of departure of the trucks from terminals to best serve the territory 

33 U. S. Dept, of Agriculture. Motor Transpo rtation for Rural Districts, 
p. 7. (Its Bulletin No, 770.) 

34 Ibid , p. 8. 









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BhoTild “be set. It must te remembered in choosing eq.uipment that there is a 
definite relation "between the size of the truck and its upkeep cost. The cost 
of operation per mile of a large truck is greater than is that of a small truck. 
If a large truck is purchased and the average load carried is well helow the 
rated capacity of the truck, the operator will find that Ms cost per unit of 
load is high. On the other hand, v\here regular loads are unf irmly heavy, the 
cost per unit of load is much less with the larger truck. One five- ton truck 
will transport a five- ton load much more economically than will two trucks of 
half that capacity. Regardless of how good the truck may he it will not 
make a profit for the owner unless it is the right truck for the joh.^® 

The accompanying graph gives an insight into the relative costs of 
hauling freight with various sizes of trucks. It shows, for instance, that 
freight can he handled cheaper in a few large tirucks than in a numher of smaller 
ones; that is, when capacity loads in both directions are available in large 
truck quantities. The cost figures, accurately kept, on the trucks operating 
in long-distance, frei^t transportation for the Fisk Rubber Company furnish 



35 U. S. Dept, of Agriculture. Motor Trans portation for Rural Districts, 

p. 15. (Its Bulletin No. 770.) — 

36 «In a survey recently made of the possibilities of establishing inter-city 
motor truck routes out of a certain city, the special investigators con- 
cluded the lowest capacity truck that could be operated, considering the 
rate that could be obtained, would be a 3-ton size. Yet the operators 
disregarded their advice and started in with 2- ton trucks. If loaded to 
80 percent of their capacity, in both directions, they could not pay, and 
they did not, the result being the failure of another line and the loss 

of much confidence". — Hi^way Engin eer and Contractor. Vol. 2 : 65. 

Feb. 1920. 

In the three years prior to 1921 fifty motor truck companies 
failed financially or gave up the business of hauling on the line between 
an Francisco and San Jose. This would seem to be a favored location for 
such business, for the highway between these two cities which are 50 miles 
^art is entirely hard surface. TUhile there are many angles to these 
failures of freight truck lines, one cause that stands out prominently is 
poor judgment in selecting equipment. Bteny operators made the mistake of 
p aclng more importance on first cost than on economy of maintenance and 
operation. — Electric Railway Journal . Vol. 55: 107. Jan. 10, 1920. 



V 






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37 

the hasia of this graph. Attention, however, nmst he called to the fact 
that these trucks operate with full loads, in both directions, over uniformljjr 
good roads, on regular schedules, between large distributing points. The length 
of haul is always less than 150 miles. Of course, if the length of haul is 
increased beyond the economic limit of motor truck operation, these curves will 
turn and ascent again. These figures must not be taken as an attempt to 
specify the exact cost of operating various sizes of trucks, in all territories, 
but only as a relation between the costs of operating such trucks. 

These and many other (ju^Btions should be favorably answered before a 
motor truck line is underta3s»n. However, the most important it«n in the 
matter of a preliminary survey has not yet been mentioned. About the first 
question a man asks himself is "How much will it cost?" This matter of 
accurate costs is so important and so many phases of the motor truck problem 
center around costs that the balance of this chapter will be devoted entirely 
to a discussion of trucking costs. 



37 Gould, H. P. Co. 



100^ Efficiency Truck Data Service , p. CF 306. 




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REASONS WHY ACCURATE TRUCKING COSTS SHOULD BE KEPT. 



The importance of having an idea of costs cannot he 0Y©r-eB5>hasisdd. 
"Extended investigation seems to show that no one act on the part of those en- 
gaged in truck transportation will do so much to place the industry on a sound 
basis as the keeping of complete, adequate and accurate cost records. More fail- 
ures in this field are traceable to a lack of knowledge such records would afford 
than to any other source. The day which marks the beginning of the keeping of 
true costs will mark the beginning of real success of any operator. 

In spite of the fact that the field is large, the business is not 
ea^eriencing a consistent, healthy growth. Truck lines are started, flourish a 
short time, and are abandoned or change hands too frequently.^® Many such in- 
stances have been investigated, aoid in practically every case the unanimous ver- 
dict has been — inaccurate costs or no cost records at all.^ 



38 Firestone Tire & Rubber Co. Firestone Ship-by-Truck Bureau. The Relation 
of Cos.ts. ^ Motor Truck Transportation , p. 1. (Its Bulletin No. 5.) 

39 According to Mr. George H. Pride, President of the Heavy Haulage Con 5 >any 
of New York City , no person or concern has accumulated a competence in the 
motor truck transportation business although the business is now tea or twelve 
years old, and con^^aratively few concerns now in the business are over six 
years old. —Gould, H. P. Co. ICX)*^ Efficiency Truck Data Service , p. TC 3. 

40 One line operating between two liqjortant cities, over good roads, with no 

competition and with unlimited business, changed hands four times in less 
than three years. A rural truck route serving an excellent agricultural 
territory changed hands four times in less than two years. — Firestone Tire 
and Rubber Co. Firestone Ship-by-Truck Bureau. The Relation of Costs to 
Motor Truck Transportation , p. 1. (Its Bulletin No. 5.) 

An operator of a truck line operating out of Joliet, Illinois in 
con5)otitlon to the railroads was asked if he was really mgyVi ng any money at 
the rates he was charging. He replied that he was making good money. 

Later he was asked if he was saving a part of his earnings and building up 

with which to buy a new truck when that one was worn out. 

Oh, no", he replied, "Why cross the bridge before I get to it?" About 
three montJas later the operator wont out of business. — Gained from a 
conversation with Mr. Thomas, Assistant to President ^Iden of the Chicago 

B^lington and Quincey Railroad in his office on West Jackson Boulevard. * 
Chicago. ' 







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"Cost accounting is not higher mathematics; it is merely a 

specialized hranch of general accounting. Simply and briefly, cost accounting 

is recording all items of expense entering into a certain operation. It aims 

to protect against loss. If a man has an accurate cost system, he does not 

need to wait for a monthly trial balance, a semi-annual inventory or the close 

41 

of a fiscal year to learn whether or not he is making any money." 

There are a number of reasons shy accurate cost records are 
necessary. Several of the important reasons are: - 

First, they check the performance of tracks, tires and other parts 
of the equipment. They locate the leaks and suggest opportunities for econom- 
ics* They make it easy to determine the relation of overhead to operating ex- 
penses and to net revenue. They enable the operator to estimate trucking costs 
and allow him to compare these costs with the cost of transportation by teams, 
train or boat. Soma of the facts shewn are: - the cost of delivery, tire 

mileage, which truck carries the least r^air cost, how long it takes to make 

deliveries and which truck is the most efficient in this regard, the truck which 
uses the most fuel per mile, the truck which covers the most mileage per day, 

what the largest ton-mileage per truck is, the time consumed by a driver on a 

job, spare parts ordered and the cost of same, the daily truck operating costs, 
operating costs per mile, operating costs per month, garage costs, how fuel 
conqjares with mileage run, idle time, the efficiency of the driver, overloading 
and overspeeding, and many other items. "Probably the largest opportunity for 
excessive costs is through the driver. Carelessness and dishonesty are probably 
the causes of more worry to the truck owner than any other one thing. It has 
often been said that no truck is bettor than the driver. A $5000 truck in the 

41 ^rwtone Tire & Ei^ber Co. Firestone Ship-by-Truck Bureau. The Belation 
of Co sts ^ Motor Truck T^ransportatlon . p. 3. (its Bulletin No. 5.) . 



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hands of a careless and Incon^etent driver soon hecomes J-unk. A bonus system 
Installed in conjunction with a cost system is perhaps one of the best correctives 
for this difficulty.**^ 

Next to careless drivers, overloading and overspeeding are probably 
the greatest sources of e:^en30. Overloading affects truck and tire deprecia- 
tion, daily repairs, annual overhaul and idle time.^^ 

The cost records furnish instant check upon such items. In other 
words, such records enable the operator to determine each individual item of 
cost and its relation to other items and to the total. By Icnowing these facts, 
he is able to determine what size and type of track is best adapted to his needs; 
the same is true as to tires and all equipment and supplies. Even more im- 
portant, however, is the fact that he is able to check his costs and rates with 
those of competing agencies and so choose the fields that are most profitable. 

Second, cost records give an intelligent basis Tjpon which to maVa 
rates. Too many truck lines have not been on a paying basis; they seem to 
operate for the good of the community and not for the profit of the operator.'^ 



42 



43 



44 



^restone Tire & Rubber Co. Firestone Ship-by-Truck Bureau, The Relation of 
CosjU ^ Motor Truck Transportation , p. 5. (Its Bulletin No. 6.) 

E^ineering News-Record . Vol. 82: 438. Eeb. 27, 1919. 

The average of the total of these items, as reported by six operators, was 
43 percent of the total operating e:qpenee. — Firestone Tire & Rubber Co, 
Firestone Ship-by-Truck Bureau. The Relation of Costs to Motor Truck Trens- 
BOrtation. p. 5. (Its Bulletin No. sTJ 

In many of the large cities contractors, who have operated fleets of trucks 
on which they have kept accrirate costs, have found that they can hire trucks 
cheaper than they could operate them. And this despite the fact that they 
could distribute their overhead over many times the number of trucks owned 
by the persons whom they hired. The reason is, the person they hired did 
not know what it cost to do business. In Philadelphia, owners of one or two 
t^cks are constantly beseiging contractors, offering 5- ton dump trucks for 
10 hours a day service at $2.25 to $3.00 per hour or $22.50 to $30.00 per 
day, when it actually cost the contractors $26,09 per day to operate their 

condition exists, but there the average 
wot to contractors was $29.22 per 10-hour day. - Highwa.v Engineer and 
Contractor . Yol. 2: 44. Apr. 1920. ^ ~ 







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It has heen learned that nearly 75 percent of the truck owners In the 
general hauling huslness have failed In from six months to a year. These fail- 
ures are not due to lack of tonnage ^ for In many cases more was offered than the 
tracks could carry. In practically every case the service hy the trucks was 

sold for less than cost because the truck owners did not know what It cost to 
45 

operate. As a result, the truck owner's capital was soon exhausted. Yet new 
lines are continually springing up basing their rates upon railway frei^t or ex- 
press rates, or both, or on what the traffic will bear and not upon a knowledge 
of costs. There Is no relation between a motor truck rate and a railroad freight 

or express rate, yet, during the war, one of our government agencies advised 

45 

that truck rates be fixed midway between the two. 

A third reason for accurate costs Is in the assistance they offer 
governmental agencies in drafting and executing sound, constructive laws and 
regulations governing motor trucks. At the present time seven states, California 
Colorado, Maryland, Nebraska, Pennsylvania, Georgia and Washington have laws 
placing the motor truck lines under the control of the state railroad or public 
utilities commission.^'^ Similar legislation will doubtless be passed by other 
states. These states have been very liberal in dealing with the truck; some of 
them have confined their attention to licenses and liabilities; Nebraska attempte( 



45 Highway Engineer and Contractor . Vol. 2: 45. Apr. 1920. 

46 When motor trucking came under the jurisdiction of the railroad commission of 
the State of California in July, 1917, there were approximately 120 lines 
operated. By September, 1919, this number had increased to 173. The 
commission could not readily give information as to which of the original 120 
were included in the 173 of 1919, for the reason that there had been many 
changes, some of the routes having changed hands as many as three times during 
that period. Several reasons are advanced for this condition. First, in 
importance, the conmission placed the fact that many operators no idea of 
costs; and second, that the operators, having no cost figures, made rates in 
a hit-or-miss fashion and not on a sound basis. —Firestone Tire and Rubber 
Co. Firestone Ship-by- Truck Bureau. The Relation of Costs to Motor Truck 
Transportation , p. 4. (Its Bulletin No. 5.") 

Ibid. p. 7. 



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to fix rates but ^ve it up after a three months’ trial. Others grant a fran- 
chise to the truck operator provided the territory is not already properly served 
by other transportation facilities.^® It is possible that some state in the 
future, in the absence of facts, may adopt a restrictive policy, which may be 
followed by other states equally lacking definite infom^ation. 

One of the first things these state commissionB want to know is the 
cost per ton-mile to operate a truck. 0?he operator may estimate that it costs 
about $20 or $30 a day, but the commission wants the cost per ton-mile on a 
particular route. 



It therefore, "behooves each individual truck operator to a very 
real effort to keep some sort of an accurate cost system, and to know the rela- 
tion of one item to another and to his business as a whole. No truck operator 
who intends to stay in business should put off the matter of installing an ade- 
quate and cou 5 >lete cost system. Regulation is sure to come in all states and it 



may not be as far in the future as an operator may make himself believe. ?lhen it 

does come, he should be able to produce for the consideration of his state legis- 
lature and of the state public service conmission, facts and figures so indis- 



putable that there will remain no excuse for the passing of any legislation or 
the promulgating of rules and regulations except such as may be beneficial to the 
motor trucking business. 



48 

49 

50 



51 



Cgcmercial and Financial Chronicle. Vol. Ill: 1412-14. Oct. 9, 1920. 

Ibid . 

Highway Engineer and Contractor . Vol. 2: 44. ^r. 1920. 

Nhen the State of Nebraska decided to bring the truck lines under the 
Jurisdiction of the State Railroad Commission, a hearing was called and the 
conmission called on the operators for cost figures. Only one operator 
present had any data and his information was so incomplete that it was worth- 
less. The Commission finally set a rate that was higher than was in effect 
on any of the lines at the time. This surprised the opera tots and they be- 
gan to appreciate the need for accurate and coo^^lete cost records. A few 
montU Uter it was decided to give up the idea of trying to regulate trucks 
nntll more progress had been made in the keeping of costs. — Hi«hwav JiMlnear 
and Contractor . Vol. 2: 44. ^r. 1920. 

Ship-by-Truck Bureau. The Belatlon 
of Coete to Motor tou^ Tranaportatlen. p. 7. (Its Bulletin Ho. T!) 












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22 



EXPENSE ITEMS PROPEELY ENTERING INTO COSTS 

Few motor truck operators foresee all of the cost items which will 
arise under actual operating conditions. Most of them forecast the cost of 
gasoline, oil and grease, drivers' wages, and equipment costs. Some of them 
recognise the depreciation charges and that interest should he charged on their 
investment, hut few of them foresee the superintendence charges, insurance costs, 
the costs of advertising and soliciting husiness, garage rent in the case where 
the operator owns his garage, and damage claims. The operator has hut one 
spurce of revenue — the money received for hauling goods. His expenses are 
Various and unexpected. The difference between his income and his e^^ense is 
either a profit or a loss to him. If he expects to make a profit, he must have 
a very definite idea of each item of cost before he fixes his rate. 

"Extended investigations show that a great many truck operators are 
laboring under the inipression that they know what it costs them to operate their 
trucks. Almost without exception v^en they are questioned on this subject, they 
will gi*e a figure which they insist covers all charges. Further questioning 
soon develops the fact that they have omitted a great many items. Herein lies 
the chief reason why so many failures have occurred. In the table below, an 
effort has been made to show all usual items which enter into the total coot of 
operation of a trucking business. No attenpt is made in this table to outline 
a cost system. Large cmnmercial establishments and otiiier operators of large 
fleets, probably will have a system of Itemizing these accounts to the last de- 
tail. The small operator will not need any such elaborate system, but he most 
know each item and keep a record of all varying costs, ti^ether they be operating 
or overhead, for every item listed below is a& applicable to the operator of a 
single truck as to the operator of a large fleet."® 

52 Firestone Tire & Rubber Co., Akron, Ohio, Firestone Ship-by-Truck Bureau. The 
Relatj^ of Costs to Motor Truck Transportation. o.9. (Its Bulletin No. 5.) 



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23 



I. Varlalsle Expexise - Operating* 

1. Gasoline. 

2* Lubricants. 

3. Tires (Including tubes, patches, etc., if Pneucaatics) . 

4. Daily Eepairs. 

(a) Chassis - parte, labor. 

(b) Body * parts, labor. 

(c) Trailer - parts, labor. 

5. ikoergency (Expense Incurred through breakdowns, etc*). 
6* Depreciation - By Mileage. 

(a) Truck. 

(b) Trailer. 

7. Claime and Losses. 

8. Driver and Helper Expenses (on long runs). 

9. Bonos (if bonus S 2 rstem is used). 

10. Idle Time. 

II. Fixed Expenses - Operating* 

11. DriverX Wages. 

12 « Helper ' s Wages . 

13. D^reclation - By length of time in service. 

(a) Truck, 
tb) Trailer. 

14. Interest on Investment. 

15* Insurance. 

(a) Fire and Theft. 

(b) Liability* 

(c) Collision. 

(d) Bqpployees* Liability. 

(e) Cargo. 

16. Taxes on Truck and Equipment. 

17. License Fees. 

(a) For Trucks and Trailers. 

(b) For Drivers. 

18. Garage, Terminal and Warehouse Facilities. 

(a) If Hented - Rent. 

(b) If Owned. 

(1) Interest on Investment. 

(2) Depreciation. 

(3) Taxes. 

(4) Izisurance. 

(c) Eepairs, Additions and Alterations* 

(d) Tools and Depreciation on Tools. 

19. Permanent ibployeea in Garage. 

20. Annual Overhaul* 

(a) Chassis. 

(b) Body. 

(c) Trailer. 

21. Heat, Light and Water - Garage. 




24 



III, Fixed Eaqpenee - Administration. 

22. Salaries. 

(a) Management. 

(b) Clerical Assistance. 

23. Office Space. 

(a) If Eented - Sent. 

(b) If Owned. 

(1) Interest on Investment. 

(2) Depreciation. 

(3) Taxes. 

(4) Insurance. 

24. Furniture and Fixtures. 

(a) Interest on Investment. 

(b) Depreciation. 

(c) Taxes. 

(d) Insurance. 

25. Repairs, Additions and Alterations. 

(a) To Office. 

(b) To Furniture and Fixtures. 

26. Telephone. 

27. Stationery and Postage. 

28. Heat, Light and Water ~ Office. 

29. Advertising. 

30. Interest on Hotes or Other Debts — Bad Accounts. 

Cost sheets shown in figures number I, II, III, and IV were furnished 
to the Truck Owners » Conference of Chicago by Mr. George H. Pride, who has made 
a success in the truck transportation business as President of the Heavy Haulage 
Con5>any of New York City.®^ 

On cost sheet Number I, Mr. Pride has filled in the items which were 
omitted, but Drtilch enter into the cost of operation, axid must be taken into 
account by the man r/ho operates the truck. 

There is no interest charged on the investment in the truck and its 
equipment and there is no depreciation shown. That these items are commonly 
omitted by the Ine^erienced truck operator is evidenced by sereral exan^jles 
pointed out in the proceeding pages, but more strongly by the fact that we have 
read or heard about so many "40,000 mile at 45 cents repair cost" trucks. It 

53 Gould, H. P. Co. 100^ Efficiency Truck Data Service . CT p. 1, 





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TRUCKING COMPANY 




















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DRIVER 


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Cost Shaet Umber I 

may be that the cost for repairs the first year is slight, but it most not bo 
forgotten that the wear is going on and aiost be paid for someday. The im- 
portance of these cost items and the way they vary from year to year as the truck 
gets older will be pointed out subsequently. 

This coat sheet includes no charge for repairs; no idle time is 
allowed; there is no charge for a license; no charge is made for supervision; 
no garage rent is charged; the men do not ask overtLme on Sundays; there is no 
labor charge for installing the twenty-six dollar’s worth of parts shown on 
the sheet. There is not only no property damage insurance, but no insurance at 
all. All that is not included in this cost sheet amounts to $11.60 and all that 
is in there amounts to $10.00, making a total of $21.60 to which must be added 

some cost for supervision. Adding ten percent for supervision brings the total 
to $24.76. 

But Mr. Pride says that 20 percent of the 300 days are idle days and 
approximately $3.70 must be added to allow for the added cost of the overhead and 
fixed charges spread over the days actually operated. As will be seen in the 




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26 



following section these fixed charges go on everyday regardless of whether the 
truck rone. 

IPhis maltes the total real cost of operating this tmck $27,46 Instead 
of $10 for each day operated. 

Coot sheet Umber II gives the cost of operating a 5- ton truck 50 
miles per day as $15,63. Mr. Pride criticizes this cost statement for the 
reason that it counts on $180 insurance cost when his coverage cost him $450 in 
New York City. Again, he objects to the $600 allowed to maintain the truck. 



He says, "But why have we users all found it necessary to replace our trucks 

after four or five years of 15,000 miles-a^year service and buy new ones? This 

item of depreciation will run at lectst $800 a year, or $3 for every actual work* 
.54 

Cost Sheet Number II 



ing day.”' 



APPROXIMATE COST OF OPERATING MODEL L 5-TON I 



MILES PER DAY (Per MUe) 


20 


30 


40 


60 


60 


70 


80 


90 


100 


Gm. 25c gal.^ 5 mi. per gal. $0.05 
OU 65c gal., 100 mi. per gal. .007 
Tires, 7,000 mi. guarantee . .079 
Maintenance 04 


$1.00 

.14 

1.58 

.80 


$1.60 

.21 

2.37 

1.20 


$2.00 

.28 

3.16 

1.60 


$2.50 

.35 

3.95 

2.00 


$3.00 

.42 

4.74 

2.40 


$3.50 

.49 

5.53 

2.80 


$4.00 

.56 

6.32 

3.20 


$4.50 

.63 

7.11 

3.60 


$5.00 

.70 

7.90 

4.00 


Total Operating Expenses. 
FIXED EXPENSES (Per Day) 

Driver $5.00 

Interest 8% 1.23 

Insurance! 60 


3.52 


5.28 


7.04 


8.80 


10.56 


12.32 


14.08 


15.84 


17.60 


Total Fixed Expenses .... $6.83 . 


6.83 


6.83 


6,83 


6.83 

g 1 . 


6.83 


6.83 


6.83 


6.83 


6.83 


Total Cost Operation Per Day . . . 


$10.35 


$12.11 


$13.8^ 


^15.63 


^17.39 


$19.15 


$20.91 


$22.67 


$24.43 



X .feuiiiiK muimeuauw oy laKing a ou-mue operation, a maintenance allowance of $600.00 
y®" w allowed. A truck being renewed at the rate of $600.00 per year would be in A-1 con- 
ation at the end of a 5-ycas period, or when figuring on 8 years as the life of an inum truck, 
the full purchase pnce of $4,055.60 (less tires, which are replaced through a separate allowance) 
would be charged off, and in addition to this, there would have been allowed $93.05 per year for 
replacements on the truck. M\j jeS > f Tcrt ^ 3 



Besides depreciation, this sheet includes no charges for garaging, 
taxes, licenses, superintendence, no charges for idleness daring the days within 
this 300-day year in which the $600 maintenance work can be done. 



54 Gould, H. P. Co, 100^ Efficiency Truck Data Service . CT p. 1. 









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Cost sheet or chart Numher III Is one that most of us have seen in 



magazines and in advertisements • It is supposed to show the average operating 



s 



TiaXJCKlS 

THIS CHART SHOWS AVIRAGE COST OF OPERATION FOR ABOUT ANY MAKETRUCK 



Sizes 

1 



r/4 

IVz 

z 

5 

Toh 



miles TRAVELED PER DAY 
0 10 20 30 40 





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2-TON TRUCK COST PER DAY -©• 2-TON TRUCK COST PER MILE 

S-TONTRUCKCOST PER DAY -«-5TOIfTRUCKCOSTP£RMllE 



contimenial! 

BROWN -LIPE 

BOSCH 

STROMBERG 

TIMKENAKLE 

TIMKEN 

BEARINGS 

DAVID 

BROWN 

TIMKEN 

WORM 

DRIVE 



Co. OF NewYork me. 

BROADWAY 



KCPRiNT ev covf<T£syA.n.inAw CO- P/>on"TH[Moro/i truck asahaio lOBusiiitssPRofin 



Cost Sheet 
Number III 



cost for practically any maJoe and size of truck. It gives an operatiisg cost 
of $10 a day for a 5-ton twenty-mile day, and a cost of $16 a day for a 5-ton 
truck, fifty-mile day. It is Just a question again, of how many items of real 
cost, for ;-vhich the user has to pay, have been omitted. 

In cost sheet Number IV Mr. Pride does not give his own cost figures, 
but shows the average of what eight responsible concerns in several different 
lines of business consider the lowest possible real operating costs under actual 
working conditions on July 1, 1919. 




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28 



FORM 3A INVESTMEN 


TS 




FORM SB CHARGES BY MONTH OR YEAR 


Year EsnifATCD 






AI.HIIENAIieT~A~TUN.LN 








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LICENSE 




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ABMIMISniATIVf OVERIICAO 


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Caraoe (Rent. Ucht, Heat. Powep> 


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PAipriNS 






•Imsuhance 




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SPECIAL EamPMENT H B I if 


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3% WdtToA 


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TOTAL 


U3ts 


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SUBTPACT Tibi V.uui 


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SUPTAACT STOSACE DATTtPr VALUE 






















i ^®’'Ti‘’0rVeP%“c?ATS‘o”'’‘'‘*‘ 


1831 


OO. 


Total | 


1 (o*fo 


OO 


1 




4>83 


Oh ZVoO-iyi 


<lj?s 


“UONTK COLUUN CAT) BE TILLEB IN ACCOPOINO TO LIMITS 
PRE<°ENT BOOK VAI UP 




■Average Yearly Irtebest X — 

FORM 3C MONTHLY ANALYSIS OF COST 


<ai E 


uVLS^VHriH*MTVE"V 


KD (C) eOUA 







CAPACITY. < 5 !- 3 ^fL-MAKE,B.Ig.pJ^—MODEI>A 



Mcs^ 

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a.«>e 



3 So 



ESTIMATED OR BUDGET 



y57«?OC /feftao 7. 



Total Con to pi Dipmcutio $ 



C<H »t 10 .^ 



EmHATCO VCARLT WAIKTINANCI J RlPAtR « 9 ^ O. 

rr-tk ropo'Tjfjoo. sTST*! 



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( SuARAnTCIO LirT -7 o o O - biir« t 



Gattert RsatwAi Cstiuatb Pep K.W.H. Cohsukco_ 



L-aLtiJLy_« ; HOURS II 



WORKING C 



OPERATING C 






iw| 3.i5o | -»^ |g< i| J-jao| 



Cost Shdet Number IV 

He says, "Siqppose you. figure a dump truck and the total investment, 
including the war tax, freight, etc., is $6,385 from which we deduct the tire 
value, making it $5,835. Your total Interest on yotir investment is $230 a year. 

"Your license fee is $60 - taken in this territory. It is true that 
on a five- ton truck you pay only $45 hut some trucks are running over in New 
Jersey and you must have some license for other states, so $60 is a reaeonahle 
item. 

"Administrative overhead, garage and insurance, brings the fixed ex- 
pense to $1,640 per year or dividing it by the day on the 300-day year gives you 
a daily cost of $5.46. 

"But you don*t operate a truck 300 days. Sometimes you have a tire 
fixed, sometimes replaced. If you replace them only twice a year, that is eight 
times. Than you must have an item of time for overhaul. If you do it once in 
two years, you divide that up to get your time for each year, and then you have 
to have time to tinker with this and that, and so on. Actual operation shows 

that 240 working days is a fair average, which makes the fixed expense $6.83 per 
day. 







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29 



"We have worked out under From 3-C (Cost sheet 4) the fifty-mile-a-day 

cost on both a 300«*day and a 240-day basis. The items of gasoline, oil and 

tires will not be increased for the idle days, but the items of drivers wages, 

sinking fund or depreciation, maintenance and repair as well as fixed expense 

will have to be increased 25 percent to spread these costs evenly over 20 percent 

less working days. For instance, you don’t let your driver out when the truck 

is being repaired, so it costs $6.25 per day for a $5 man if he actually drives 

55 

only 240 days in the year." 

Cost on 300-day Basis, 



Gasoline, at 3^ miles per gallon $3.50 

Cylinder Oil 

Driver’s Wages 5,00 

Sinking Fund 4,00 

Maintenance and Repair 3,30 

Tires, at 6 cents per mile 3,00 

Fixed Expense 5,45 



Total $24.76 



Cost on 240-day Basis. 

Gasoline | 3,50 

Cylinder Oil 

Driver ’s Wages. 6,25 

Sinking Fund 5,00 

Maintenance and Repair 4,12 

Tires 3,00 

Fixed E^^ense 6,33 



5fotal $29.20 



It is interesting to check Mr. Pride’s figures with those of other 
operators in his territory. In the same year (1919), at the annual meeting of 
the Motor Truck Association of America, it was asserted that many published costs 
were too low and worked injury to contractors and haulage cctapaiiieB basing their 
charges upon them and pulled the stigna of overcharge upon those who placed their 
charges high enough to meet actual conditions. 



55 Gould, H. P. Co. 100^ Efficiency Truck Data Service . CT p. 1. 



30 

They started an investigation to determine a proper cost accounting 
eystan* As a basis for their investigation, the cost for a five-ton gasoline 
truck shown in detail in Table I was submitted by one of the largest operators of 
trucks in the East, with the suggestion that it be sent out to all ti^ck opera to r^ 
requesting them to criticize it and suTsnit their own costs for the information of 
the Association.®® 

The Table is based upon actual es^erience; it is assumed that the 
truck makes 50 miles per day and works 300 days per year. The variable charges 
are accumulating only while the truck is under operation, while the fixed are 
accumulating whether the truck operates or not. Supervision includes all office 
e3q>enses, stationery, printing, advertising, office help, telephone charges, out- 
side men, etc. The cost of mechanical garage equipment, power, spare parts, 
etc. with interest on the same, and depreciation is included in the amount 
charged to maintenance and overhaul. 

Average operating conditions as to load were used in compiling this 
table. These have equalled a full load one way or, for a fifty-mile day, trans- 
portation of 125 ton-miles at about 24 cents per tonnnile. The costs are 
actual, no profit being included to cover risks. 



56 j^ine^ering News-Record . Vol. 82: 438. Feb. 27, 1919. 








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31 



TABLE I. 

COST PER-MY-OPERATEL FOR 5-IOlT GASOLINE TRUCK 
Unit Tsased on 50 miles per day per truck 
and 300 days per year. 

Direct Charges 

Amount 



Driver | 5.00 

Tires, "based on present cost of tires 

guaranteed "basis 3,00 

Oil, grease, Irarosene, graphite, etc. ,50 

Gasoline, ^3^ mi per gal. = 14 gal. 

@ per gal (Average) 3,50 

Indirect and Overhead Charges 

Depreciation, 20 ^ on $6,000 investment 4.00 

Interest, 6 ^ on $ 6,000 investment 1,20 

Insurance averaged at $450 per year 1,50 

Garage, rental, upkeep, etc. $300 per year per car 1,00 

Maintenance, minor repairs, supplies, tire chains, 
tools, lamps, springs, sparkplugs, 
equipment, etc. (estimated) 1.00 

Overhaul, complete, pro-rated $600 yearly 2.00 

License fee . 2 q 

Body upkeep, repairs and paintizzg ,30 

S\^ervision, "based on 10 ^ of above costs 

Lost time - time lost in repairs, no work, 
weather or other causes 20 ^ of total. 



less gas, tires and oil, etc. $7 

Total cost per day operated 



Totals 

$12.00 



11.20 

2.32 

3,70 

$29.22 



32 



table II 

ANSWERS RECEIVEr) OIT THE INQUIRY SENT OUT, USING THE SAME 
ITBIS AND BASIS FOR FIGURES. 

Direct Charges 





A 

amt. 


JS 

amt. 


amt. 


D 

amt. 


E 

amt. 


F 

amt. 


Average 
amt . to tal 


Driver 


5.00 


5.20 


5.00 


5.00 


5,17 


5.50 


5.13 




Tires 


3,00 


3.75 


2.00 


2.00 


2,00 


3.00 


2.68 




Oil, etc. 


.30 




.30 


.50 


,25 


.25 


.35 




Gasoline 


3.00 


4.00 


3.50 


4.65 


2.08 


3.75 


3.50 


11.66 








Indirect 


Charges 










Depreciation 


3.50 


4.19 


3.60 


3.40 


3.67 


4.00 


3.77 




Interest on 
Investment 


1.20 


1.26 


1.08 


1.22 


1.10 


1.00 


1.15 




Insurance 


1.50 


2.54 


1.26 


2.10 


.86 


.50 


1.47 




Garage 


1.00 


1,20 


1.00 


1.00 


.98 


1.00 


1.01 




Maintenance 


.50 




.50 




1.00 




.75 




Overhaul 


1,33 


2.75 


1.80 


1.60 


2.00 


3.00 


2.07 




License 


,17 


.27 


.20 


.20 


.20 


.20 


.20 




Body upkeep 


.25 




.30 


.10 


.40 




.27 


10.69 


Supervision 


.50 


2.93 


2.05 


1.90 






1.90 


1.90 


Lost time 


2.20 




‘ 1.67 


3.40 


2.50 


1.97 


2.57 


2.57 


Total 


23.45 


28.09 


24.26 


22,07 


22.12 


24.17 




26.82 





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33 



Table II gives the cost as submitted by six trucking companies in 
answer to the inquiry. The averages shown in the last two columns Include the 
figures in Table I.^*^ 

In considering the returns, it will be noted that many of the dif- 
ferences are in such elusive terms as overhead, superintendence, and lost time. 
The averages in the last two columns were obtained by adding the amounts together 
and dividing by the number of reports on each itaa. The average total cost per 
day, while somewhat less than the suggestion sent out or the figures given by 
Mr. Pride, in the main agrees very well. In sending out the suggestion it was 
not thought that there would be agreement within several dollars, but it was be- 
lieved that a much hi^er cost would be shown than is generally supposed. 

The purpose in analyzing the cost sheets and tables in this paper has 
been to point out the items that are often not accounted for, but which properly 
enter into the coot of operation and make that cost much higher than many people 
generally suppose. 

The figures, as given, apply particularly to the operation of trucks 
in large fleets, such as those employed by the interurban haulage con 5 >anies. 

They were furnished by companies operating out of New York City. 

It is probably true that the items most frequently omitted are 
interest, depreciation, superintendence, idle time and garage rent, particularly 
when the garage is owned by the operator. The following tables show the 
relative in 5 >ortance of the different cost items and show how the costs rise and 
the profits diminish as the truck grows older. 



57 ^gineering News-Record . Vol. 82: 438. Peb. 27, 1919. 



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34 



The figures in Table III were secured from the books of several 
operators who were running from one to forty trucks each. All trucks are of 
five- ton capacity, and the daily mileage averaged 40.5 miles. Although the 
table is not as detailed as could be desired, it can be seen at a glance that 
some items of cost are much more ia^ortant than others. 



Table III. 



58 


No 


1919 


i of 


1920 


^ In- 


Cost Item 


Trucks 


Cost 


Total 


Cost 


creased 




Average 


per day 


Cost 


per day 


Cost 


Gasoline 


124 


$3.42 


13.1 


$4.11 


15.7 


Lubricants 


113 


0.42 


1.6 


0.42 


1.6 


Tires 


114 


2.29 


8.8 


2.52 


9,7 


Repairs and Overhaul 
Labor — 


127 


2.90 


11.1 


3.19 


12.2 


Material — 


127 


2.21 


8.5 


2.43 


9.4 


Driver’s Wages 


U3 


4.96 


19.0 


5.46 


20.9 


S\ 5 )ervision and Overhead 


113 


1.74 


6.7 


1.74 


6.7 


License 


113 


0.11 


0.4 


0.11 


0.4 


Garage 


113 


0.74 


2.8 


0,74 


2.8 


Insurance 


113 


1.25 


4.8 


1.38 


5,3 


Interest 


114 


0.76 


2.9 


0.84 


3.2 


DepreOiation- — — — 


114 


5.29 


20.3 


5.82 


22.3 


Totals — 




26.09 


100.0 


28.76 


110.2 



The figures in column two are actual operating costs taken from the 
books of the operators. Definite figures on lubricants, supervision, license 
fees and garage for the year 1920 are not available; so the same figures were 
used as in 1919. These figures, if they could be obtained, would doubtless be 
somewhat hi^er than in 1919. 

The cost of gasoline in 1919 is based on a price of 25 cents a gallon 
while the price in 1920 was 30 cents. This increase in price of 5 cents a 

gallon increased the operating cost per day 69 cents and the total operating cost 
2,6 percent. Tires represent 8.8 percent of the total operating cost; an 



58 Firestone Tire & Rubber Co., Akron, Ohio. Firestone Ship-by-Truck Bureau. 

2^ Relation of Cos_te to Motor Truck Transuortation . p, 14. (Its Bulletin 
No. 5.) 














i •: 







1 



35 



increase in the cost of tires of 15 percent increases the total operating cost 
1.32 percent. Repair and overhaul expense; that is, the cost of labor and 
materials, shows an increase of about 10 percent. Since their total equals 
19.6 percent of the total operating cost, this 10 percent increase maJtes a two 
percent addition to the operating cost of the truck. Between these two periods 
there was an increase in the price of trucks of approximately 10 percent. This 
rise affects insurance, interest, and depreciation which aggregate 28 percent of 
the total operating cost, increasing the daily operating cost about 75 cents. 

^ The trucks upon which these figures are based operated an average of 
265 days a year; one fleet of ten trucks averaging only 219 days per year. It 
can be seen that the fixed e^enses represent 57 percent of the total. The im- 

portance of idle time can be realized when it is seen that the idle time of these 



trucks increased their total operating cost almost 10 percent. 

The total cost of gasoline, oil and tires is 23.5 percent of the total 
: cost. An increase of less than two miles in the average daily mileage will pro- 

i duce a corresponding increase of one percent in the total operating cost. 

i 

Table IV shows the average operating results of seven five- ton trucks 



operated in one fleet. 

Table IV 
59 

1916 

No. Hours down for repairs 0 

No. Miles run 2592 

No. Miles per day 54 

Gasoline per day 3,43 

Oil and Grease per day 21 

Labor per day.. ! ! ! ! ! ! ! ^ 3 .M 

Repair Labor per day 00 

Repair parts per day ,oo 

Overhead, Depreciation, etc. per day 11. 19 

18.38 



1917 

34 

11704 

56 

3.57 

.41 

5.00 

.43 

.44 

12.01 



1916 

109 

9020 

41 

2.56 

.65 

5.00 

5.62 

3.09 

11.81 



21.86 



29.13 



59 



nrestone Tire & Rubber Co., Akron, Ohio. Firestone Ship-by-Truck Bureau. 

•‘•a?. .PQ Nation of CoaU ^ Motor Truck Transportation .p.14. (Its Bulletin No. 5 .) 



I 










.s. 



«■ 

» 










36 



The ingjortant thing shovm hy this table is the consistency of increase 
in the time the trucks were dovm for repairs, and the increasing daily costs for 
repair parts and the labor necessary to install them. Based on the figures in 
Table III this item of lost time alone increased the total operating cost a little 
more than 2.6 percent. 

The cost sheets and tables in this section have been given to show 
the importance of keeping accurate cost accounts. The importance of the accounts 
has been stressed by showing the in^ortance of some of the items which many 
operators fail to consider. For Instance, most operators have a hazy idea that 
when they are not running they are not making a profit and some realize that idle 
time is really costing them something, but few have any conception of how much. 

To the operator who keeps accurate cost figures there is a very definite point 
at which it becomes economical to salvage his truck and buy a new one. 

Ho attexapt is here made to specify motor truck costs that will hold 
good for all time, in every locality, and for every operating condition. It is 
evident that costs differ even with the same sized truck, hauling the same load 
and covering the same distance, with different roads and different traffic con- 
ditions. The costs of gasoline, oil, supplies, wages, etc. vary from time to 
time and in different localities. But it is the purpose here to bring out those 
factors that should be considered in estimating costs; .the operator or prospective 
operator can supply the local current rates and prices, and allow for his 
particular conditions. 




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Form 10 NATIONAL STANDARD TRUCK COST SYSTEM. TRUCK OWNERS CONFERENCE, INC., 5 S. WABASH AVE., CHICAGO 

No ANALYSIS OF TRUCK COST 



Date- 



According to National Standard Cost Practice of the Truck Owners Conference 
H. P. GOULD, Chairman 



CHECK SOURCES OF DATA 

□ National Standard System 

□ Individual System 

□ Owner’s Records 
O Owner’s Estimates 

□ Investigator’s Estimates 



Age of Truck at Start of Period 

Address Period Covered to 

Operation 

Truck Capacity Make Model Body Mfrs. No Truck No.. 



Analysis of 


A. 


Number of Days Operated 


C. 


Delivery or 

Pick-up Stops 


E. 


Operation 


B. 


Number of Round Trips 


D. 


Total Units 


Out. 


F. 



Total Units In 



Miles Traveled., 



3A. Investments: 



(1) Chassis 


$ 




(2) Storage Battery {if Electric) 


$ 




(3) Body 


$ 




(4) Top 


$ 




(5) Painting 


$ 




(6) Freight 


$ 




(7) Special Equipment 


$ 






% 




(8) Total 


$ 




(9) Subtract Tire Value 


$ 




(2) Subtract Storage Battery Value 
(10) Total {Less Tires and Batteries) 
to be Depreciated 


SI 




$ 




Present Book Value 


$ 1 





3B. Fixed Expense: 



{\\)* Interest, Item (8)....Frs. @ % 

(12) Taxes {Property) 

(13) License {State, City, etc.) 

(14) Administrative Overhdtid 

(15) Garage {Rent, Light, Heat, Power) 

(16) Insurance 



(17) Total Fixed Expense per Year .... 

{V7a)Total Prorated for Period 

(18) Total Fixed Expense per Month 

(174-12) (17(z4-A)% 

(19) Total Fixed Expense per Day 



Year Estimated 



Mtc. and Repair — Actual 
as Guide to (35) 



. which (A) equals length of sinking fund" 
interest Formula: years. (B) equals the investment. 



A 



X 



cy.B 



(C) equals the rate of interest, 
terest on depreciation reserve. 



Allows in-\ 



(20) S- 

( 21 ) %.. 
( 22 ) 

(23) I- 

(24) $ , 

(25) 

(26) 

(27) 

(28) 

(29) 

(30) $... 

(31) $_ 



(32) Total For 

Period S 

(32a) $ Per Mile 



Depreciation: Total Cost {\0)% For Minimum Ufe of {B3) Miles = {3i) $ 

Maintenance and Repair: Estimated for Period (35) $ For {F) Miles = {3Q) $ 

Repair Due to Accident: {Not Covered by Insurance): (37) $ For {F) Miles ={3S) S 

' "or UU o! (39) » 

Fuel Cost: (41) Gals. (42) @ ^ per Gal =(43)$ For {F) Miles = {ii) I 



Cylinder Oil Cost: (45) Gals. (46) @ ^ per Gal. = {4:7) $ For {F).. 

Battery Renewals and Maintenance: (49) $ For {F).. 



..Miles = {48) $ 
.Miles = {50) f 



. Per Mile 
Per Mile 
.Per Mile 
..Per Mile 
..Per Mile 
.Per Mile 
.Per Mile 



Total Variable Expense: For Period (51) $ {Excluding Driver' sW ages) For {F) Miles = {52) $ ...Per Mile 

Total Fixed Expense: For Period {\7a)8 For {F) Miles = {53) % Per Mile 

Total Driver’s Wages: For Period (54) S (@ (55) $ per Day) For {F) Miles = {55) $ Per Mile 



Total Cost: 



For Period (57) 



For {F) Miles = {58) 



Cost per Day, Variable Expense: (52) $ per MilcX Average Miles per Day (59) = (60) $ 

FiXGd Expense I ^NOTE: — To figurethecost onotkermUeageper dagthantheaverageforthe^ _q9) 

I period. Item {69), it is only necessary to multiply Item {52) by the number I V 
VA/onoe* I miles desired, and add Items {19) and {55) which remain the same. I /eK\ » 

L-'iivcr b VVciyes l^Caution: operating conditions should be the same, otherwise Item {52) will vary. J — lOOj ® 

Total Cost per Day : = (61) $ 



..Per Mile 

Per Day 
Per Day 
Per Day 
, Per Day 



Cost per Unit : Total Cost for Period{57) $ 4 - Total Units Hauled {D+E) = (62) f .....per {Unit). 



Miles for Period (63) = Total Miles (-j) X Average Load per Trip (^^^) or (-y 

Cost per Unit-Mile: Costper Unit (62) $ -i-]/^Round Trip Distance or (KX^) = (64) $ Per {Unit) 



.Mile 



Capacity 


(S7) Cost for Period 


(4) Days 


(61) Cost per 


(59) Miles 


(F) Miles 


(68) Cost 


(6£) Cost 


{6.^) Cost per 


{65) Miles per 


(66) Miles per 


Operated 


Day 


per Day 


Traveled 


per Mile 


per 


Mile 


Gallon of Gas 


Gallon oj Oil 




$ 




% 






$ 


$ 


% 







Suggestions and Directions for Using Form 10 



L et us follow a simple 
case of cost analysis 
as it would be entered 
on Form No. 10 and 

After making the obvious 
notations at the top of the 
sheet as to date, owner, 
opei'ation and identification 
of the units to be analyzed, 
the number of days oper- 
ated will be noted (Item 

A). ... 

If an estimate is being 
made your figure must be 
kept low enough to allow 
for possible overhaul, and 
days out of commission for 
any reason including lack 
of work for the truck or 
sickness of the driver. 
There are an average of 
25.5 working days in the 
month, making 306 working 
days in the year, after de- 
ducting Sundays and 7 
holidays. 

(B) If the number of 
round trips or pick-up 
stops are known, or if the 
tonnage is obtainable either 
out or in, these facts should 
be noted under B, C, D, 
and E, respectively. 

(F) The miles traveled 
during the period covered, 
either actual or estimated, 
must be entered in space F 
to get any costs worth 
while. 

Under items 1 to 7 
should be entered the in- 
vestment made or neces- 
sary for chassis, body, etc., 
including special equip- 
ment to get the total in- 
vestment (Item No. 8). 

Item 9. The tire value 
must be subtracted from the 
total investment (as well 
as storage battery value if 
electric), because this is 
charged under operating 
expense on a mileage basis, 
to give (Item 10) the total 
to be depreciated. 

If the truck has been 
credited with the deprecia- 
tion reserve for some time, 
which lowers its present 
book value, this can be 
noted below Item 10. 

The Fixed Expense items 
are entered under the year 
estimated column — inter- 
est on item 8, taxes, license, 
overhead, garage rent and 
insurance, to find the total 
fixed exnense for a year 
(Item 17). This must be 
prorated for the period cov- 
ered by this report (Item 
17a), which will be divided 
by Item A to give the total 
fixed expense per day 
(Item 19). 

Item 18, Total Fixed Ex- 
pense per Month, can easily 
be found by dividing Item 
17 by 12. 

Actual maintenance and 
repair, if this is a study 
of an actual case, mav be 
entered by months from 
Items 20 to 31, which will 
give a Total Actual Re- 
pair for the period under 



Item 32 which will be used 
as a guide for the Esti- 
mated Maintenance and 
Repair for the period 
studied (item 35), two 
lines below. 

We next note Item 10 on 
the depreciation line and 
divide it by the estimated 
life of the truck in miles 
(Item 33), which should be 
very carefully handled and 
not overestimated. This 
item alone makes hundreds 
of dollars of difference 
profit or loss to the truck 
owner in a year if not 
properly handled. 

The conditions under 
which the truck has been 
or will be operated must 
be taken into consideration 
in setting the estimated 
life. A truck in one kind 
of service may run 100,000 
miles, while in another 
kind of service the same 
truck may not last 25,000 
miles. Actual, average 
cases (not exceptions either 
way which only go to prove 
the rule that the average 
should be taken) must be 
inserted in Item 33. The 
result will be the Depre- 
ciation Cost per mile (Item 
34). 

Maintenance and repair 
is estimated for the period 
under Item 35, and here 
again a conservative figure 
must be used. Even if the 
repairs have only been $10 
for a period of a year, the 
maintenance and repair, 
which includes the tighten- 
ing up of bolts, painting, 
alignment, cleaning of 
spark plugs, periodical 
overhaul, all items of main- 
tenance, which should be 
be charged against the 
period whether they have 
actually taken place or not, 
may make the figure of 
$300 to $600 a year the 
proper item for insertion 
in (35). 

This must be divided by 
the number of miles trav- 
eled (Item F) to give Item 
36, the Maintenance and 
Repair Estimate per mile. 

Repairs due to accidents 
when not covered by insur- 
ance, should be totaled un- 
der Item 37 and divided by 
the number of miles (F) to 
equal Repair Due to Acci- 
dent cost per mile (Item 
38). 

The tire cost will be Item 
9, if the truck is operating 
on its first set of tires, but 
may be a different amount 
if a second set or part of a 
second set have been pur- 
chased at a different price 
which makes the total dif- 
ferent. This figure is di- 
vided by Item 39, the num- 
ber of miles (shown by ac- 
tual experience, guarantee 
or by a conservative esti- 
mate) that had best be 
used in getting the Tire 
Cost per mile (Item 40) 



which is found by simple 
division. 

The fuel cost can only be 
obtained when the number 
of gallons used for the 
period (Item 41) and the 
price per gallon (Item 42) 
can be multiplied to secure 
Item 43, which is the total 
cost of gasoline for the 
period. Item 43 divided by 
Item F will give Item 44, 
the Fuel Cost per mile. If 
the miles per gallon of gas 
is estimated or assumed or 
is known by test, it offers 
the guide to Item 41 and 
allows the figuring of fuel 
cost per mile. 

Cylinder oil cost is found 
in the same way by multi- 
plying the total number of 
gallons used (Item 45) by 
the price per gallon (Item 
46) to secure the total cost 
in the period (Item 47), 
which is divided by the 
Miles Traveled (Item F) to 
secure Cylinder Oil Cost 
per mile (Item 48). 

Battery renewals and 
maintenance, if the truck is 
electric driven, should be 
entered under Item 49, di- 
vided by Item F to secure 
Item 50, Battery Renewals 
and Maintenance Cost per 
mile. 

The Total Variable Ex- 
pense for (F) miles is 
found by adding items 34, 
36, 38, 40, 44, 48 and 50 to- 
gether to secure Item 62. 
If these individual costs per 
mile are carried to four 
decimal places. Item 62 will 
be very near accurate if 
multiplied by (F) miles to 
give Item 61, the Total 
Variable Expense for the 
period. 

If actual costs are being 
studied. Item 61 will be 
known and be divided by 
Item F to give Item 52, 
which again will be very 
close to what it would be 
when Items 34 to 50 in the 
column are added. 

Total Fixed Expense for 
the period (Item 17a) 
brought down from the 
fixed expense section above, 
is divided by (F) miles to 
equal Item 53, the Fixed 
Expense per mile. 

Total Driver’s Wages can 
be obtained for an estimate 
by multiplying the wages 
per day (Item 55) by Item 
A, number of days oper- 
ated, to give Item 54, Total 
Wage for period, which in 
turn is divided by miles 
traveled (Item F) to give 
Item 66, the Driver Cost 
per mile. 

In an actual cost analysis 
the total driver’s wages for 
the period (Item 54), is 
known. Item 55 is filled in 
for later use, and Item 54 is 
divided by item (F) to give 
Item 56, Driver’s Wages per 
mile. 

The total cost for the 
period (Item 57) is ob- 



tained by adding the three 
totals for the period. Vari- 
able, Fixed and Driver’s 
Wages for Item 67. When 
this is divided by Item F, 
Miles Traveled, it equals 
Item 58, the Total Cost per 
mile. 

The next section of Form 
10 will lead us to the Cost 
per Day, which is the most 
common and one of the 
most misleading items in 
the study of truck costs un- 
less the conditions are 
taken into account, for it is 
greatly affected by the 
number of days operated 
during the period, by the 
question of whether a help- 
er is used and by the 
number of miles run in the 
average day. It is prob- 
ably the most useful item 
of all, when considered with 
these factors clearly in 
mind. 

Cost per day is found by 
multiplying the _ Variable 
Expense per mile (Item 
52) by the Average Miles 
Run per day (Item 59), 
which of course is secured 
by dividing the Miles Trav- 
eled (Item F) by the Num- 
ber of Days Operated 
(Item A). The multiplica- 
tion of Item 62 and Item 
59 gives us Item 60, the 
Total Variable Expense per 
day of that number of 
average miles operation. 

Fixed Expense per day 
is simply Item 19 transfer- 
red from the Fixed Ex- 
pense Section of the form 
to its place under cost per 
day. 

Driver’s Wages is sim- 
ply Item 65, four lines 
above. Total Cost per Day 
(Item 61) is the total of 
Items 16, 19 and 55. 

The Cost per Unit is ob- 
tained by dividing the Total 
Cost for the Period (Item 
57) by the Total Units 
Hauled (Item D if the re- 
turn haul is empty) which 
gives the Cost per Unit 
(Item 62). 

When one-half the aver- 
age round trip distance and 
the average load per trip 
are known, the Total Ton- 
miles or Unit-miles for the 
Period (Item 63) is obtain- 
able by the use of the 
formula on the same line. 

Cost per Unit Mile is ob- 
tained by dividing the cost 
per unit (Item 62) by one- 
half the Round Trip Dis- 
tance, if the return load is 
empty, which gives Item 
64. 

The box headings across 
the bottom of Form 10 give 
a space for the summary of 
the items noted which can 
simply be taken from the 
numbered spaces to corre- 
spond with the exception 
of Items 65 and 66, which 
are determined by dividing 
the number of gallons of 
fuel and oil by the number 
of miles (F). 



is simply an analysis form and not to be confused -with the National Standard Truck Cost Forms -which enable a roan to secure hli i 
actual truck opcratinp costs from daily cost entries. Tliis real cost cysteni is necessary to secure the facts upon which the analysis Forin 10/ 
•Jiould he basoii. 7 



37 



NEED FOR UNIFORM SYSTEM OF ACCOUNTS. 

Rie need for ‘uniform accounting method# can he suggested hy the fact 
that some truck operators figure their depreciation on an ass-umed life of four 
years and others on a life of 75,000 milaa. Both methods have the s^port of 
able and recognized cost accountants, hut it is readily seen that, althou^ either 
method may he correct in any particular case there can he no intelligent con^arl- 
son of costs between con^anies using different systans. There can he no 

standard of meas-urement , and an operator can not tell how his costs cofl 5 )are with | 
the costs he reads so much about in the papers and magazines unless he knows that 
they are all figured on the same basis. 

I 

Mr. Robert C. Hargreaves, a transportation engineer of Detroit, says ' 

that the prevailing variations in handling the d^reciatlon or sinking fund item I 

1 

affect the final cost 65^; the maintenance charges, handled differently, admit j 
of 21^ variation in final cost; variations in apportioning tire costs vary final 
costs 13^; and the difference in figuring the work unit varies unit cost in the 

! 

ratio of 1 to 10, and all of this in spite of the fact that any one operator may I 

SI i 

use any one method and get accurate costs.^ For this reason, the Track Owners* ; 

Conference of Chicago is trying to promote a uniform method among operators. ! 



60 Engineering and Con try; ting Vol. 49: sup. 24. Feb. 6, 1918. 

61 Gould, H. P, Co. iob% Efficiency Truck Data Service . CT p. 1. 



38 



VARIATIOUS IN HANDLING THE DEPRECIATION 


OR SINKING FUND ITM AFFECTS 


THE FINAL COSTS 

62 


65fo. 




An average day*s work assumed. 






Life estimate, 100,000 miles. 


Cost per day 


Ratio 


1. 60^ First year 

25^ Second year 




1.65 


25^ Third year. 




1 ^0 


0 Fourth year 




JL%OCf 


2. 20^ Each year 


12.14 


X • 

1.25 


3. Mileage basis 


11.21 


1.15 


maintenance charges, handled differently, abut of 21^ VARIATION 


IN THE FINAL 


COST. 




Assume repairs of two kinds 


Ordinary 


Overhaul 


First year 







Second year 100.00 



Third year 

Total 



1. With repair costs based on first year 

2. With repair costs based on second year 

3. With repair costs based on third year 

4. With repair costs over three years 



. 59.00 


$500.00 


Cost per day 


Ratio 


$ 8.29 


1. 


8.53 


1.03 


10.06 


1.21 


8.97 


1.08 








lit. 






/. 



I 



I- 



1 



I 



/, 









i 

{ 



39 



VARIATIONS IN APPORTIONING TIRE COSTS VARIES FINAL COSTS 13^. 

63 

1914 1915 1916 1917 



Set of tiree put on November, 1915. Cost per 





Day. 


Ratio 


1. Charging for tires only when put on. 

(Figured in the current year) 


8.06 


1.12 


2. On guaranteed mileage basis 


.. 8.12 


1.13 


3. On actual 710,000 mileage basis 






4. During periods when no tires are charged. . . . . . 


, . 7.14 


1. 


DIFFERENCE IN FIGURING THE WORK UNIT VARIES UlTIT COST 


IN THE RATIO 


of 1 to 10. 






The ton-mile units in a day’s work Figured 
in Four Different Ways. 


Cost per 
Ton-Mile 


Ratio 


1. Tons times miles 




1. 


2, Loaded miles per trip times total tons 


. . . 190 


10. 


3. On actual 710,000 mileage basis 




4, Tons per trip times miles per trip. 




5. 



There are almost as many ways of figuring ton-miles as there are com- 
panies figuring. Defined, a ton-mile is the carrying of one ton, one mile. 

And also the package mile is the carrying of a package one mile and the M-foot- 
mlle is the carrying of M feet one mile. The ton-mile is the most convenient 
for the operator carrying gravel, coal, sand, etc. The package mile is well 
suited to the department store delivery or long distance express hauling, while 
lumber dealers will probably use the M- foot-mile.®^ 

63 Gould, H. P. Co. 100^ Efficiency Truck Data Service . CT p. 1. 

64 Bigineering and Contracting Vol. 49: sup 22. Feb. 6, 1918. 






I 










40 



Ton-mllas depend upon the load hauled and the milea traveled. A two- 
ton truck carrying two tons one mile will do two ton-miles of work. It is very 
essential, however, that we understand the true relationship between these two 
items in order to get a true unit cost. 

"There are at least three hauling conditions: 

1. Carrying a capacity load the entire length of the round trip. 

2. Carrying a capacity load to a given point and returning anpty. 

3. Carrying a capacity load out and returning with a partial load. 

"Starting with a capacity load and distributing it over the entire 

round trip may be considered in the second group. Each of these conditions 
should be figured differently. The first we will call "Pull Load" basis; the 
second, "Half Load" basis; and the third, "Three-quarter car fractional" basis. 

"In figuring on the "Pull load" basis, every mile of travel is 
represented by an actual load and so the cost can be equally distributed over the 
entire mileage. On the "Half load" basis only half the mileage is represented 
by a load, and so the loaded miles must pay for the empty miles. 

"Also on the "three-quarter or fractional" basis only a part of the 
entire miles traveled are represented by a capacity load and these empty miles 
m\i8t be paid for by the loaded miles. 

"A formula for figuring these conditions can be esqpressed in either of 
two ways. By trips we mean round trips. 



" Pull Load Basis t- 

1. Miles per trip X 

or 

2. Miles per day x 



tons 

total (packages) per day = 
M-feet 

tons 

Average (packages) per trip 
M-feet 



ton 

(package) Miles 
M-feet 



tom 

« (package) Miles 
M'^^feet 









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41 



Half Load Baslat- 



tons 



ton 



3. Milea per trip x 
2 



Total (packages) per day * (package) Milea 



M-feet 



M-feet 



or 



4. Milea per day 
2 



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ton 

(package) Miles 
M-feet 



Fractional Load Basis: - 



5« Miles per trip 

total ^ Loaded 
miles • Miles 



tons 

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ton 

(package) Milea 
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or 

tons ton 

6. Miles per day x Average (packages) per trip = (package) Miles.'* 

Total 2. Loaded M-feet M-feet 

Miles* Miles 

How many ton-miles of work does a 5- ton truck do maMng 8 trips per 
day, hauling a capacity load one way, and running a total mileage of 40 miles per 
day? If the truck carried a full load both directions, the total work would 
be 40 miles times 5 tons or 200 ton-miles. But since the truck carries a load 
only one way , the loaded distance is one— half the daily mileage, therefore, 20 
miles times 5 tons equals 100 ton-miles ~ the truck is operating only 50^ 
efficient. Some users have multiplied the miles traveled per day by the total 
weight in tons carried that day. That is, 5 tons per trip times 8 trips equals 
40 tons per day times 40 miles per day equals 1,600 ton-miles. The truck in that 
case is 800^ efficient - an obvious absurdity. This method of figuring mi^t 
be correct if only one trip was made each day, but when more than one trip is 
made the result would have to be divided by the number of trips. Even this 
result would represent an ideal condition and not an average one. 

65 Biflineering ^ Contracting Vol. 49: sup 22. Feb. 6, 1918. 




3^ 



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42 



If the true daily costs and the ton-miles are known, elmple division 
will give the cost per ton-mile. It may he of interest to point out here that 
if the conditions surrounding the operation of two trucks of the same capacity 
are identical, except in the ntimher of miles which each travels, the ton-mile 
coot will not he the same* A table taken from standard cost figures will indi- 
cate this: 



Miles per day 


15 


20 


25 


30 40 50 


60 


Cost per mile 


$0,307 


.248 


.213 


.189 .16 .142 


.131 


Cost, ton-mile 


.204 


.165 


.142 


.126 .106 .094 


.087 



From the table it is seen that increasing the daily mileage in this 
case from 15 to 60 miles has reduced the ton-mile cost over 57 percent. 

The reason for this is that there are two kinds of cos to, fixed and 
variable. The fixed coots are those that must be paid every day even if the 
truck stands idle while the variable costs are those which depend upon the work 
that the truck performs. The fixed charge is the same regardless of the mileage; 
so the fixed charge per mile will depend on the number of miles. If the fixed 
charge is $4.00 per day and the mileage is 20, the charge per mile will be $.20, 
but if the mileage is 40, the charge per mile will be $.10. 

The trucking business, being a con^jaratively siirple one does not en- 
tail an Intricate cost system. Any truck operator can keep his costs or any of 
his clerks can keep them. Many small operators feel that it is not necessary to 
keep costs and performance records on one truck. This is a mistaken idea; the 
man who is operating but one truck cannot afford to have it operating inefficient- 
ly. His entire capital is often invested in that truck and its success means 
everything to him. Then too, from time to time, he may buy other trucks and 
66 Gould, H. p. Co. 100^ Efficiency Truck Data Service . CT p. 13, 




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43 

build up his fleat; so the kind, size, and equlpiaent of subsequent trucks is 
determined by analyzing the performance of the first one. 

Some operators may not be able to install a cost systan; it is not 
necessary that they should. There are standardized systems on the market that 
can be purchased at a nominal cost. One of these, the National Standard Truck 
Accounting System, is deserving of mention. This system was worked out and pro- 
moted by the Truck Ovmers’ Conference of Chicago; not a body of e^^erts, but a 
group of truck owners, operators, and manufactur/ersV * » who recognized the need 
for a uniform system of accounting in order that intelligent comparisons of true 
costs could bo made. The system is not sold at a profit; bids are received for 
the printing of it, and it is sold to all truck operators at cost. The system is 

checked and revised once each year to include any improvements that may have de- 
67 

veloped. (See Appendix) 

! 

The motor truck industry has grown tremendously in the past few years, 
and has been filling a gap in our national transportation scheme. In the coming 
years, with the further development of our country, it will doubtless play an 
even greater part. But like all other forms of transportation, it has distinct 
fields of economic operation and for hipest efficiency it should be kept within 
those fields. If the operator who enters the motor transportation industry is to | 
be successful, it is essential that he devote himself to a consideration of his 
business problems; he must minutely and carefully analyze the fields; he must 
use initiative; and he must have a proper sense of business proportions. His 
most helpful source of knowledge consists of the facts and relations that are 
afforded by an adequate, accurate and complete cost system, 

67 Although there are a number of these standardized, conplete, and adequate cost 
systems on the market which are cheap, sinple, and easily kept, their use is 
yet very limited. It is estimated by good authority that cost records are 
kept, according to these systems, for approximately five percent of the trucks 
in use. There are in use today nearly 1,000,000 trucks and such records are 
kept for about 50,000 of these. Of course, there are a number of individual 
systems in use, yet it is doubtful if costs are kept on as many as ei^t per- 
cent of the total number of trucks in use. - Lane, F. Van Zandt. Motor 
yruck Transportation , p. 27. 

















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CHAPTER III. 



THE MOTOR TRUCK AND THE RAILROAD - PRESENT AND FUTURE. 



45 



DEFINING THE DIFFERENT TYPES OF SERVICE. 

Anyone who attempts to discuss the transportation prohlem today im- 
mediately hecoraes so immersed in conflicting relationships between the various 
elements of the transport machine that a discussion is hardly possible without 
reference to these elements and the relative weight or position which they possess 
in the general transportation scheme. 

The principle factors in transportation considered by the consignor 
and consignee are time, cost and safety. There are five means of overland trans- 
portation; railroad frei^t, railway estpress, electric package, motor truck, 
and cartage, including both motor and horse. For any variation in the relative 
Inportance of the three transportation factors there is a transportation medium or 
combination of mediums which is the most advantageous. 

"Railroad frel^t is properly a combination of railway and cartage. 
Deliveries are slow. Safety is obtained only by the enforcement of more or lees 
conplicated and confusing rules and regulations on packing requirements. Trans- 
portation cost is low, but not as low as appears on the surface, the cost of 
cartage being absorbed in the Invoice for the merchandise, 

"Railway express Includes cartage and is much faster than frel^t even 
for very short distances. Breakage is little, and the packing requirements are 

less stringent. Loss probably is less, especially of small packages. Electric 
package includes cartage in some sections of the country, while in other sections 
it does not. It is, as a rule, faster than express, the safety factor is about 
equal and the cost comparatively less, 

"Motor trucking is the fastest transportation medium and it is the 
safest for short haul package freight if the statistics conpiled by conpanies 




Miniiqcnoo "V* 



46 

that write insurance for commercial haulers are to he helleved.'*^ 

In this thesis it will he shown that commercial trucking can con^iete 

with freight and eaqjress rates within certain limits. ITo comparison will ho 

made with electric package service, for the reason that the electric package 

2 

delivery system is not extensive and, ho?/ever far it may he extended, always will 
he limited, as are the railroads and railway express lines, hy the handicap of 
infloxihillty. In speaking of this lack of flexihility. Secretary Sedfield of 
the Department of Commerce and Labor has said, "!]:iiere is a limit to what the rail- 
roads can do. A railroad might huild ten tracks wide and yet the farms and 
towns twenty miles off to one side wouldn*t he any hotter served. They would 
still have to haiil that twenty miles everything they bought and sold. And there 
is another point; the railroads have to keep to the level routes, as far as 
possible. If your town or fann is off in the hills, no railroad is going to 
come your way. But the motor trucks will."^ 

That the service performed hy the truck in opening up these new pro- 
duction areas and furnishing a speedier agency of transportation to scattered 
communities located away from the railroads is an economic and valuable one is 
without question. Whether or not the truck line will he profitable will he de- 
termined hy the prices that the commodities hauled can command in the general 
market. If the goods cannot he produced and placed on the market at a cost that 
will allow them to compete with like commodities, so far as the truck line is 
dependent upon the handling of those goods, it is hound to fail. 

There is no doubt that the crisis in the transportation field, brought 
about hy the national war emergency, afforded a stimulus to the development and 

1 Firestone Tire and Rubber Company, Akron, Ohio. Firestone Ship-hy-Truck 
Bureau. ^e Mgt^r Truck Terminal , p. 23. (Its Bulletin No. 7.) 

2 Ibid . 

3 Agterican Magazine . Vol. 87: 18-19. Mar. 1919. 



V 













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47 

eBtabllehment of motor transportation more powerful than any other general in- 
fluence. War conditions created very unusual demands for transportation facili- 
ties of all kinds. The railroad shipping facilities were inadequate; they were 
facing car shortages, inefficiencies in loading, lack of support and other 
serious handicaps. Goods had to he moved or factories would have shut down for 
lack of raw materials. The armies had to he supplied. Cost was no item. 
Transportation at any cost was wanted. This was truly an emergency. During 
this period, trucks entered the field of transportation and without question they 
performed an invaluable economic service. All fields were fruitful fields for 
trucks in those days; they could do short-haul or long-haul work and 
money. 

**Inter— city shipping hy truck, which under ordinary circumstances is 
included in the short-haul category, was coninonplace even before the railroads 
began to falter under their burden - almost as ordinary as the motorization of 
hauling and delivery within the city. Whan the already over-worked railroa^ds 
were hit by the switchmen’s strike, shipping for a time received what amounted to | 
near a knock-out blow. ! 

"It was here that the motor truck stepped in, not only in a legitimate 
way on short-hauls, but, as the demand grew, on hauls that grew longer and longer, 
until the 1000 mile mark had been passed in numerous instances. Now, the ex- 
perienced truck maker knows that under ordinary conditions there is no economy in 
truck hauls of such distances. Hence he would not reconmend than except in 
cases of great urgency. 

"However, many an emergency did arise which sent motor trucks over 
the roads on long trips. True, the cost of these ventures was high, but shipper 
and consignee alike considered the expenditure an ultimate economy after estimat- 
ing the financial loss through delayed shipments and loss of business that would 






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48 

hare "been entailed *by waiting for shipment hy rail. Weighing conditions and 
consequences, they considered emergency long-hauls by motor fleets justified, but 
only emergency long-hauls. 

”In order to keep its factory running the Bradley Knitting Mill, at 
Delavan, Wisconsin, had to have yam, freight embargoes notwithstanding, from the 
Attleboro, Massachusetts, plant of R. Walfenden and Sons, comnission dyers and 
bleachers. A White 5-ton truck was called into service. With a cargo of 
worsted yams valued at nearly $35,000 the tmck operated by the Globe Coal Co. 
of Woonsocket, Rhode Island, set out on a scheduled round-trip of 2,300 miles. 

The contract price for the trip was $2,888.85 or approximately $2.40 per mile one 
way or $1.20 per mile for the entire route. 

"Normally, the yam would have been shipped by freight. But here was 
an emergency, to be met promptly. Had the truck not been thrown into the breach, 
curtailment of production at the Bradley Knitting Mill would have been necessitat- 
ed, The extra expense of shipping the cargo by truck was more than jixstified, 
officials felt, by the urgency of their need, 

"Similar situations, similarly met in other parts of the country, 
raise the question whether the use of trucks, though involving increased expense, 
was not an ultimate economy. Suppose delayed shipments of raw material had 
been allowed to force suspension of production, with a consequent loss of time 
for eriployees? Very shortly, lost time and decreased production would have 
proved more costly than emergency use of trucks for long-hauling of the needed 
raw materials. Less tangible, but none the less real, was the danger of weakened 
prestige by failure to pronptly fill certain orders, a danger that proved to be 
the closing factor in the decision of certain firms to use trucks on emergency 
long-hauls. Although impossible to compute in dollars and cents, prestige, it 
was realized, was worth protecting even at soma expense.... 



49 



"But emergency hauling over long distances, or transporting perishahle 
goods quickly when demand is urgent are merely minor phases of truck utility. 

The point to he kept clearly in mind is that the truck’s great worth is in trans- 

4 

portation work under normal conditions." 

Conditions are now getting hack to normal, the railroads are not lack- 
ing in cars as they ware a year or so ago, prices are coming down and people are 
not so anxious to have goods transported that they will pay any price. It is in 
this period that the fields of the truck must he carefully studied. 

There is no question that the truck still performs services the value 
of which cannot he estimated. The largest peach crop in the history of the State 
of Connecticut, for instance, was saved last year when trucks entered the field 
and hauled the peaches to railroad terminals or directly to market.^ But tliis 
is still an emergency service. 

Often department stores in the larger cities operate truck lines which 
deliver their goods to the outlying districts. These lines are operated usually 
not hecause of any economies in operation over other agencies, hut because they ar( 
considered good advertisements and are regarded as a part of the service policy of 

C 

the co ncern. Other companies such as the Goodyear Tire and Ruhher Company and 

4 Good Roads . New Series Vol. 20: 265. Dec. 1, 1920. 

5 Iitenchester (Connecticut) Herald. Motor Truc ks Save Largest Peach Cron in 
B._8tory Connecticut , (its Editorial) Aug. 20, 1921, 

6 One of the best advertising features that Marshall Field and Company of Chicago 
have, is that they agree to make delivery within 50 miles of their store within 
24 hours. It is true that this may increase their delivery cost over and above 
slow frei^t movement, hut prompt delivery gets the business, and slow delivery 
loses it, - Gould, H. P. Co., 1005 j Efficiency Truck Data Service . CF p. 302. 

The Strauss Con^any of New York City, makers of signs, often ship signs to 
points 150 miles away by motor truck. By making its own deliveries, this com- 
pany has reduced breakage to a considerable extent; there is less e:q)en8e for 
crating; and considerable time is saved. The workmen who must travel to install 
the signs travel on the truck thus effecting a saving in railroad fare. Their 
tools are carried along with them and the sign; so delay in placing the signs is 
avoided. Many of the large electric signs are ranted and any delay in install- 
i^ them means loss to the manufacturer. - Good Roads. New Series Vol. 20* 

221. Nov. 3, 1920. — 






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30 



the Fisk Rabher Con^jany operate over-land motor freight lines which handle their 
raw materials and finished product*. These lines were profitable during the war, 
but their primary purpose was not that of economic freight hauling, but that of 
providing a means of testing pneumatic truck tires. 

These services are all ecorwmic services and must be credited to the 
truck, but in this discussion we are primarily interested in the truck handling 
freight over regular routes and on regular schedules in conpetition with rail- 
roads. In this field the service performed by the truck is not an emergency 
service: it must show advantages that justify its use. An official of the 

Hilhite Congjany sounds this warning: 

"When the National Provlsioner, in 1919, stated editorially that *if 
it wasn*t for the motor truck millions of dollars invested in manufacturing 
plants would be at a standstill and hundreds of thousands of men laid off through 
lack of materials and supplies held vcp by the transportation situation’ it re- 
corded a fact. 

"Collier’s too, took cognizance of the situation that had arisen due 
to the stagnation of the rail movements, when it said that ’the motor truck was 
a hope as early as the time of the great pre-war frei^t congestions on the 
Atlantic coast, but it passed that stage during the recent railroad strike, when 
it saved many of the big cities from starvation’. 

"To builders and users of motor trucks these are gratifying words, but 
they should not be permitted to disturb calm Judgment as to the relative places 

occupied by the railroads and the motor trucks in the transportation of American 
Oommerce. 

"To be a ’pinch-hitter’ in time of emergency, and to perform the tasks 
that fell to it with credit, buttresses the good opinion that the motor truck 
7 Gould, H. p, Co. IPO^ Efficiency Truck Data Service . C.F p. 305, 






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51 

has earned in routine service of American industry. But to "be lad astray “by the 
success of that emergency work, and to assume tasks that cannot he economically 
and efficiently handled as a regular duty, is to move backward rather for- 
ward, 

"Material advances in freight rates have recently been awarded the 
railroads. The inevitable result of these advances is to make truck transporta- 
tion more profitable within certain limits. Tasks that have hitherto been hand- 
led leas cheaply by trucks than by railroads may now move over into the realm of 
profitable truck operation. That an increased use of trucks will follow seems 
obvious . 

"If proper caution is observed this increased use of trucks should be 
helpful, rather than otherwise, to the railroads. It will offer relief from 
the short-hauls that are fruitful sources of congestion and give the railroads 
the best possible opportmity to get back to a normal functioning. 

"But danger lies in assuming too much for the motor truck, and busi- 
ness men generally should guard against denying to the railroads revenues that 
rightly belong to them and business that can be most economically handled by 
than - even thou^ such denials are made in what seans to be a laudable attea^jt 
at building up an emergency transportation system capable of Independent action. 

"Increased freight rates are, no doubt, needed in order that revenues 
for the revitalizing of the z^ilroads shall be provided. Good railroads are 
absolutely essential to progress. So are motor trucks. But each has its place. 
A misguided attempt to substitute the truck for the railroad, however worthy 
truck equipment may be within its own sphere, is an economic blunder that can 
only add to the burden now being borne by the consumer - to whom errors of Judg- 
ment are immediately translatable in terms of dollars and cents,"® 

8 The White Company, Cleveland, Ohio. The Albatross Vol. 8; 22. (its Bulletin 
No. 57.) 



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52 



several factors aiding the E3CPANSION OF MOTOR TRUCKS IN 
FREIGHT SERVICE. 

Due to the steadily increasing railroad freight rates, to the dis- 
astrous congestion and consequent delays of this service, and to the rapid de- 
velopment of good roads in the past few years, a field has teen opened up in 
which the motor truck offers many advantages over any other transportation agency. 
It is the piirpose of this chapter to point out the most important of these ad- 
vantages and to define the approximate limits of this field of operation. 

The Boston News Bureau says that since 1913 railroad freight rates 
have increased as much as 500 percent. The following table gives a comparison 
of the railroad freight rates in effect in 1913 in New England with those in 
effect in 1921.® 



HDW NEW ENGLAND FREIGHT RATES HAVE INCREASED. 
Rates are shown in cents per 100 pounds. 



Classes: 


10 Miles 
I 


II 


III 


IV 


V 


VI 


1913 


7 


7 


6 


5 


4.5 


4.5 


1921 


38.5 


32.5 


26 


19.5 


13.5 


11.0 


Percent Increase 


450 


364 


333 


290 


200 


144 


1913 


20 Miles 
7 


6 


6 


5 


5 


5 


1921 


42 


35.5 


26 


21 


14.5 


12 


Percent Increase 


500 


491 


366 


320 


190 


140 


1913 


25 Miles 
10 


9 


9 


8 


8 


7 


1921 


46 


39 


31 


23 


16 


13 


Percent Increase 


360 333 


244 


187 


100 


85 


1913 


50 Miles 
15 


13 


11 


9 


9 


9 


1921 


54,5 


46.5 


36.5 


27.5 


19 


15 


Percent Increase 


263 


267 


231 


205 


111 


72 



9 National Motor Truck Committee. Motor Transport Cuts Time and Cost of Shiruina 
in New. England , p. 1. National Automobile Chamber of Commerce, 366 Madison 
Are., New York, 




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In a report of the Special Coranlttee appointed to investigate motor 
transportation in New England, to the Chairman of the Executive Coninittee of the 
New England Traffic League, among other things, it cited the fact that ”It often 
takes 216 hours to ship hy rail from Bridgeport to New York, a distance of 56 
miles, and 4 or 5 days "between points in Comecticut less than 40 miles apart. 

In other instances, delays of from 2 to 7 days have resulted on distances of 
from 50 to 100 miles.” The Eeport states these two factors are largely res- 
ponsible for the Increased use of motor transportation.^^ 

In 1918 the average movement per railroad car per day was 24.6 miles; 
in 1919 it was 23.1 miles; the greatest car movement ever attained by the rail- 
roads was 26.9 miles per day per car. It is said by some that the average 
speed of railway freight is a mile an hour.^^ 

These increasing costs of shipping by railroad freight coupled with 
the delays of this service have Influenced many shippers to turn their short-haul, 
less- than-car load shipments from the railroads to the motor truck. Especially 
is this true in those districts such as New England, and the territory surrounding 
Nev7 York City, Baltimore, Philadelphia, Washington, D. C. , etc. where the con- 
ditions are particularly favorable to motor truck transportation. Of course, 
the rapid development of good, hard-surfaced roads is the one important factor 
that has made possible this regular and dependable service of the truck. 

"When it is considered that the large majority of the industries in 
New England are located within a strip of territory fifty miles from the Atlantic 
Coast between New York and Portland, Maine, and that in no other section of the 
United States is there such a density of toanufac taring with such uniformly good 

10 National Motor Truck Committee. Motor Transport Cuts Time and Cost of Shiu- 

plng in New Engird, p. 1. National Automobile Chamber of Commerce. 366 
Madison Ave., New York. 

11 Good Roads . New Series 7ol. 20: 159. Sept. 29, 1920. 










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54 



State highways connecting the various manufacturing communities, it will be seen 
that this territory is pecularily adapted to the use of motor trucks. There 
must also be taken into consideration the fact that many of the manufactures in 
New England are high grade commodities moving at the higher class rates in less- 
than- carload quantities, the rail transportation charges on which are sufficiently 
high to peiTfdt of movement by motor truck when the trucking charges to and from 
the railroad are added to such transportation costs. In addition to this class 
of traffic, there is a large volume of heavy traffic bearing comparatively high 
rates for local hauls that readily lends itself to motor truck transportation. 

This movement, generally speaking, is from the seaboard to the interior, or in 
the reverse direction."^ 

This quotation sums up in a concise way most of the conditions that 
are essential to the successful operation of a motor truck freight line operating 
daily, on schedule, in competition to the railroads. In the first place it is 
mentioned that the hauls are comparatively short. Next the manufacturing is 
concentrated and population dense, offering a large volume of freight. The 
roads are uniformly good. The commodities are hi^ grade commodities, moving on 
high rates in quantities adaptable to motor transportation. And, finally, the 
traffic moves in both directions. 

THE short-haul' 

The inportance of uniformly good roads and of sufficient volume of hi^ 
grade freight alvrays to guarantee full loads in both directions has been mentioned, 
but will be further emphasized as the respective fields of the railroad and motor 
truck are outlined in this section. 

12 National Motor Truck Committee. Motor Transport Cuts Time and Cost of 

pipping ^ New England , p. 1. National Automobile Chamber of Commerce, 366 
Madison Ave., New York. 



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It has been said that the very hxisiness which proves a revenue loser 
for the railroad, proves to he a revenue producer for the motor truck. 

Looking at the short-haul problem from the standpoints both of the 
shipper and of the railroad, there seems to be hardly any question at the present 
time that the handling of less than carload shipments on short-hauls is not only 
expensive to the shippers, but ur^irofi table to the railroads. 

A brief recently submitted to the United States Supreme Court in a rail- 
road case stated that the terminal cost of handling less-than-carload freight in 
1916 was slightly less than five cents per hundred pounds at each terminal, or 
double that amount for the two terminals. Since 1916 the average cost of handling 
freight destined to three large stations in Truck Line territory from fifteen 
stations ranging from Cincinnati to a town of 100 inhabitants in the Central 
Freight Association territory was 22 cents per hundred pounds. This means that 
at the present first-class rate of 35 cents for hauling one hundred pounds a dis- 
tance of five miles, it is necessary to haul the average less-than-carload tonnage 
40 miles to break even on 80 percent of the actual costs, leaving nothing whatever 
for profit, taxes or interest on the investment. 

It is said by some railroad men that it costs as much to handle their 
freight in the City' of New York as it does to ship it 3,000 miles overland. The 
same men are quoted as saying that it costs from 7 to 100 times as much to handle 
railroad terminal and short-haul tonnage as it does to handle the same freight by 
motor truck. Eailroad men are looking into the merits of motor truck lines as 
feeders, and as relief from the terminal and short-haul expense. 

13 National Motor Truck Committee. Motor Transport Cuts Time and Cost of Shipping 
in New England, p. 1. National Automobile Chamber of Commerce, 366 Madison 
Ave., New York. 

14 Highly Engineer and Contractor . Vol. 2: 41. Apr. 1920. 




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Edward Hungerford, an authority on rail freight transportation says, 
"Old time railroads for years past have said that a freight car did not begin to 
make money until it had hauled its goods at least 40 miles; today the modem 
generation of operators will come nearer to putting this figure at 80 miles. Up 
to a distance somewhere between these figures - and undoubtedly far nearer 80 
than 40 - the vast terminal charges of the American railroad nullify the profit 
of the haul itself. This is a principle of rail transportation so well under- 
stood ty all competent authorities today as to be open to no dispute whatever. 

"Transportation World" says, in part, editorially, "An examination of 
the freight rates for short hauls by any railroad executive ought to convince him 
that the rate does not even pay the terminal cost, regardless of the line-haul and 
a profit on the transaction. Very evidently, the long-haul profits have and are 
going to make up the loss on the short-haul business. It is therefore, pertinent 
to say that the doing away of the loss on the short-haul business by the substi- 
tution of the motor truck for the railroad car and locomotive, would leave Intact 

the profits on the long-haul, with all the advantages that it possesses in re- 

16 

turns, attractiveness , of investoent, etc." 

Again the Commercial and Financial Chronicle says: 

"It is generally held that a railroad does not begin to earn profit in 
the handling of a freight car till it has been hauled a distance of 40 to 60 
miles; Indeed some authorities place the distance as hi^ as 80 miles. For 
this reason, the railroad conpanies offer no serious objection to the apparent 
conpetition of trucks and are glad to be rid of annoying short-haul business. In 
appreciation of the value of the motor truck as a relief measure, several railroad 

15 National Motor Truck Committee. Motor Transport Cuts Time and Cost of 

S hipping ^ New England, p. 2. National Automobile Chamber of Comeme 366 
Madison Ave., New York. 

16 Ibid. 











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conqpanles are operating truckportation lines of their own for short distances out 
of their congested terminals, as notably, the Santa Fe, the Central Railroad of 
New Jersey and others. The American Railway Express Company also, in conipetition 
with its own service, has inaugurated a direct line of motor trucks from New York 
to Newark and other nearby New Jersey cities. 

The e:q)ense of transferring the less- than-car load shipments one or 
more times when moving to points within fifty miles of the shipper's station, and 
the additional expense of having equipment tied up on such freight work was 
recognized by the Government during the war when the United States Railroad Ad- 
ministration ruled that freight destined v/ithin a certain radius would not be 
handled by the rail carriers.^® It became necessary, therefore, for the shippers 
to find some other means of shipping this freight. The motor truck, although it 
was in its infancy in the freight line business, offered to the shippers a way 
for handling less- than- car load shipments more promptly and at a considerable sav- 
ing to shippers and receivers. 

Looking now at the short-haul problem from the standpoint of motor 
truck operation some idea will be had as to the present approximate limit of 
economic truck operation. 

In answering the question of how far he thou^t motor trucks could be 
operated successfully and economically in competition with railroads, Mr. F. J, 

St. John of the Willys-Overland Conpany says: - "Every time man power is anployed 
in handling a shipment, cost and expense is created. Therefore, why load a 
local shipment on trucks, transport it to the depot, rehandle it twice, and then 
repeat the performance at the destination, when the truck could maVA the delivery 

17 Coianerclal and Financial Chronicle . Yol. Ill: 1412. Oct. 9, 1920. 

18 National Motor Truck Committee. Motor Truck and Railroad Freighting , p. 1. 

National Automobile Chamber of Commerce, 7 East 42nd Street, New York. 










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direct within a 100-mile radius in a very few hours at less than the cost of 

IQ 

freight charges alone, and with the saving of much valuable time.” 

Mr. W. J. L. Banham, General Traffic Ivlanager of the Otis Elevator 
Company, in answering the question says: - "In general, I am of the opinion that 
motor truck transportation can, and should compete successfully with the carriers 
to short-haul points. The delivery time is all in favor of the motor truck, and 
I am satisfied if the manufacturers will take into account all of the various 
costs and charges wfeich are a part of a true freight transportation cost, that 
motor trucks can be operated successfully in con^etition with the carriers for 
distances of between 10 and 125 miles. 

Again Mr. John R. Hunt, Industrial Engineer of the Fisk Rubber Company, 
Chicopee Falls, Massachusetts says: - "Our trucking department was started with 
the intention of having a means of testing truck tires, but, since the beginning 
of the war, with attendant increase in transportation costs, we have found that 
we are able to use trucks very profitably for shipments within a radius of one 
hundred and fifty miles. One must keep in mind, however, the conditions in 
which we are situated, for this would not be strictly true for all operators. 

For example, being situated as we are, with large distributing points for our 
product near the source of OTir supply of raw materials, we are able to maintain a 
schedule with capacity loads in both directions at all times. These points are 
within a reasonable distance from our plant so tliat the round trip never takes 
more than three days and in many cases only two. Our road conditions are also 

very good and are uniform in all directions travelled by our long distance 
trucks, 

19 10^;E ^ Practical Btogazlne of Efficient Idanagement . Dec. 1921. p. 124. 

<50 National Motor Truck Coianittee. Motor Truck and Railroad Freighting , p. 4. 

National Automobile C^ber of Commerce, 7 East 42nd Street, New York. 

*-1 Gould, H. P. Co. 100^ Efficiency Truck Data Service. CF 305. 






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59 



FACTORS TO BE CONSIDERED IN A COIiPARISON OF TRANSPORTATION 

COSTS. 

In comparing tha costs of shipping goods hy railway frei^t and by 
motor truck it is necessary to take into account all items of expense incurred in 
getting the mercJmndise from the door of the consignor to that of the consignee. 

If the freight rate is 96 cents per hundred pounds and the rate by truck to the 
same point is $1.25 per hundred pounds, it does not necessarily mean that it costs 
29 cents more to ship by truck. 

To deterraine the cost of shipping freight by rail it is often necessary 
to add charges for switching and for demurrage to the freight rates charged. 

To this must be added the expense of pacing and loading the freight. Items 
under this head that should be con^ared with similar items when motor trucks are 
used are: - cost of ^ce for storage of boxing material; cost of material for 
packing and boxing; cost of space for packing and boxing; cost of labor for 
packing and boxing; cost of loading on tracks or cars; cost of trucking to the 
freight house; cost of trucking at the receiving end; cost of uioloadlng at the 
receiving end; and finally, the cost of unpacking at the consignee’s place of 
business. 

In analyzing the freight costs the gr oss tons and the net_ to ns shipped 
should be determined. The net tons equal the actual weight of the merchandise 
in the shipment. The difference between this and the gross tons gives the 
welght_o£Jboxing and pacing on which freight is being paid. In most cases, the 
expense of packing and boxing shipments that move by rail is higher than if they 
moved by truck direct from consignor to consignee, for the reason that added 



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protection ia necesaary “because of the many handlings the lea a- than- carload 
freight shipments receive at the hands of the carriers and the teamsters at “both 
ends of the route. In many cases, this ea^jense can he reduced if goods are 
shipped by motor truck, for the goods need only protection for loading and un- 
loading and protection in transit without transfer. If the amount of boxing 
and crating can be materially reduced, much less space is needed in the shipping 
department: the amount of lumber carried for boxing, the space necessary to 

store it, and the freight charges on it can be greatly reduced. This space 
could be used for production and turned from an ejqpense to a profit. 

Next the offi^costs involved in freight shipment must be considered. 
The items included under this head are: - Cost of checking prepaid freight bills; 
cost of entering claims against carriers for overcharges; cost of furnishing the 
customer with a bill of lading and notifying him of the date of shipment; cost 
of tracing delayed shipments; cost of looating or replacing damaged or missing 
parts of shipments; and finally, the cost of collecting damages from carriers. 

In several of these items, such as furnishing the customer with a bill of lading, 
tracing delayed shipments, the truck now shows an advantage, but, as will be 
pointed out later, these advantages may be taken away with the introduction of a 
uniform ’’truckportation” bill-of- lading and the development of motor truck 
terminals. 



22 



The Otis Elevator Conpany of New York City by using motor trucks for their 
less- than-car load, short-haul freight saved over $100,000 in lumber and boxing 
costs in one year. Mr. Banham, their traffic manager, said in speaking of 
this saving of the motor truck over the railroad: «I consider one of the 

greatest savings made possible by motor truck transportation that of lumber 
and other material used for packing, together with additional labor and other 
charges incident thereto. The amount of this saving, however, will be con- 
trolled largely by the material to be boxed or packed, and ho?; much less pro- 
tection can be used when moving via motor truck as against a less-than-carload 

movemOTt via freight." - Gould, H. P. Co. 100^ Ef ficiency Truck Data Service 
Ojb p , 303 . ' — — ■ 





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100 % TRUCK DATA SERVICE 



Costs — Freight CF 

Truck Owners Conference Freight Cost Analysis Form 

Designed by HAROLD P. GOL LD, Chairman Truck Owners Conference, Chicago 



Shipper — Period Studied- 

Address Yq 



Tonnage Analysis Outgoing — Within Radius of Miles. 

Gross Tons Freighted 
Net Tons Freighted 

Net Ton Miles Freighted (Total ton-mileage— tons X miles all shipments) 

Per cent gross tons within this radius is of total gross tons freighted all distances 


Carload 


Less 

Carload 


















Per cent number of shipments within this radius is of total shipments freighted all distances 






Cost Analysis — Within Above Radius 

RAILROAD. 

Total Freight Rates charged within above radius ....... 


Carload 


Less 

Carload 






Total Switching Charges within above radius ........ 

Total Demurrage Charges within above radius ........ 

PACKING AND LOADING. 

Cost of space for storage of boxing material 














Cost of material for packing and boxing ...... 


Cost of space for packing and boxing ...... 


Cost of labor for packing and boxing ...... 


Cost of loading on trucks or cars ....... 


Cost of trucking to carrier 






Cost of trucking at receiidng end ....... 


Cost of unloading at receiving end ...... 


Co.st of unpacking at receiving end . 


Total packing and loading cost, all distances .$ 


Packing and loading chargeable to above radius, at percentage of total tonnage given above 


Financial costs as totaled. on reverse of sheet ........ 






Office costs as totaled on reverse of sheet ........ 

Delay costs as totaled on reverse of sheet ........ 










Total of all costs chargeable to above radius ....... 

Cost per net ton-mile freighted within above radius. ....... 

Comparative ton-mile cost of shipment by truck within above radius. 



















L’OPJ right, Ihiy. These Analysis Sheets for sale at 5 for 2oc. Address Truck Owners Conference, 5 So. Wabash Avenue. Chicago. Sept. 1. 1919. 



100% truck data service 



Costs — Freight CF 



FINANCIAL. .1-^ 

Cost of Insurance while in transit ^ 

Cost of Uncollected Damages 

Interest Loss on Investment for material in transit by freight . 

Interest loss on collections delayed on account of freight delays . — 

Total of above four costs on all shipments -‘f' 

Amount chargeable to above radius at percentage of total tonnage given above . 



Carload 



I^ess 

Carload 



OFFICE. 

Cost of checking prepaid freight bills ...... 

Cost of entering claims against carriers for overcharges 

Cost of furuhshing customer B/L and notifjdng when shi})ped 

Cost of tracing delayed shipments ...... 

Cost of locating or replacing damaged or mi.ssing ]iarts of shi]nnent 

Cost of collecting damages from carriers . ..... — 

Total office costs all distances ........ ^ 

Office costs chargeable to above radius at percentage of total number of shipments given 
above 

DELAY. 

Cost of loss of profits on business lost to com]>etitors because of 
delayed freight shipments that cpiicker truck delivery would 

have saved .......... ^ 

Cost of manufacturing product earlier to meet customer's re(piirements 

because of uncertainty of freight shipment ... 

Cost of increased inventories of material and prodiiet required because 

of probable freight delays ....... 

Cost of shut-downs or delays on account of freight delays . . . — 

Total of above four costs on all shipments . . . . . $ 

Amount chargeable to above radius at percentage of total number of shipments given above 



(Post carload and less carload, financial, office and delay costs to spaces provided on reverse of this sheet.) 



I T is no easy task to com- 
pare the tine cost of 
freight shipment with 
motor truck cost, hecanse of 
the (lifliculty in finding out 
just what freight movement 
costs within a given radius 
in a particular business. 

After frequent discussions 
of the subject of freight 
costs at Conferences in Chi- 
cago, Detroit, Buffalo, Pitts- 
burgh, Philadelphia and New 
York, the new T. O. C. 
Freight Cost Analysis Form 
has been designed. 

Traffic men will find that 
having this form to guide 
them in requests for costs 



from other departments as 
well as their own, will 
greatly simplify their ta.sk 
ill assembling the necessary 
tacts upon which to base a 
coiiqiarison of freight with 
trucking costs witliin the 
same radius. 

Tile use of this standai’d 
form among the thousands 
of executives already using 
the National Standard Truck 
('ost System will also sim- 
plify comparison with others 
seeking the same true costs 
of freight and truck move- 
ment. 

No one dares claim that 



the truck has reached its 
limit of service in moving 
freight, and if it has not, 
then certain business con- 
cerns are today failing to 
save thousands of dollars by 
not hauling by the better of 
the two methods. 

Analysis now will save 
some of these concerns for- 
tunes, just as the Otis Ele- 
vator Company found that 
motor truck movement be- 
tween certain cities would 
save $100,000 a year in pack- 
ing costs alone. 

This is a plea for imme- 
diate anal.vsis of the true 



freight cost within a 25 or 
."iO-mile radius by every 
large shipper, for his owa 
financial benefit and the tre- 
mendous national saving the 
use of the better method 
will make possible. 

Any costs considered small 
in comparison with the 
others on the form may be 
simply omitted or estimated 
without injuring the useful- 
ness of the form. Study will 
often show, however, that 
items at first thought small 
are really very important 
when .seen in their true re- 
lation. 



61 



Fimlly, the i^ipuiclal and delay costs of freight shipment must ho 
taken into accoimt. The items included under this head are: - Cost of insurance 
while the goods are in transit; coat of uncollected damages; interest loss on 
investoent for material in transit; interest loss on collections delayed on 
account of freight delays; loss^ of profits on business lost to conqpetitors be- 
cause of delayed freight shipments that quicker delivery would have saved; cost 
of manufacturing the product earlier to meet the customer's requirements because 
of uncertainty of freight shipment; cost of increased inventories of material 
and product required because of probable freight delays; and finally, the cost 
of interrupted operations on account of freight delays. 

It often takes from two to five days to get a car off the terminal in 
a large shipping center; it may then bo in transit for several days and again 
take two to five days on the terminal at the receiver's city. \7hen conducting a 
large business, this time element is important, because it means that the material 
deliveries must be scheduled farther in advance, which results in increased in- 
ventories. The amount of material that is in transit is not producing anything 
for the shipper or the receiver. The longer the goods are delayed, the greater 
the interest on the money invested in them becomes. 

"The average receiver of freight apparently does not consider invoices 
for material due unti l d elivery has been made, regardless of whether the material 
is sold F. 0. B. shipping point, or F. 0. B. delivery point. 

"If the terras of the sale are 2 percent, 10 days, or net, 30 days, he 
usually takes 10 or 30 days from the receipt of the freight. If the goods are 
in transit 30 days, it means that you are selling on 60 days' credit, instead of 
30 days. Another real freight cost. 

"If delivery can be made within 24 hOTirs via motor truck, there could 
be no question about when the invoices are due, and the money could be used for " 






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further manufacturing, or in any other way decided upon hy the shippers. ” 



23 



COl/IPAPJSON OF IMTSPORTATIOIT COSTS. 

Mr. W. J. L. Banham, Traffic Manager of the Otis Elevator Con^any, "has 
made some very interesting studies of rate comparisons on merchandise moving hy 
rail freight or hy motor truck, after taking in account many of the itaas just 
discussed. 

As a basis he usee the first class frei^t charge. To this he adds 
15 cents per hundred pounds for teeimlng charges from the shipper *s warehouse to 
the freight depot and another 15 cents for teaming charges from the freight house 
to the receiver’s warehouse. Then he adds 24 cents per hundred pounds to cover 
the additional cost of hoxing and crating the shipment sufficiently to meat the 
requirements of the railroad freight regulations. And finally, he adds 17 per- 
cent of this total amount per hundred pounds to cover the increased weight caused 
hy the increased hoxing. The rate hy motor truck, he figures out, covers de- 
livery from the shipper’s warehouse to the receiver’s warehouse. 

These figures are worked out on an average basis, and while they are 
substantially correct, they must not he taken to cover conditions existing in 
different localities. It will he noticed that the trucks are operating in a 
section of the country discussed earlier in this paper, which is particularly 
favorable to truck transportation. 



23 Gould, H. P. Co. 100^ Efficiency Truck Data Service . CF p. 302. 











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COIdPAEISON OF COSTS BETWEEN LESS-THAE-CAELOAB FREIGHT MOVEMENT AHIl MOTOR TRUCK 

traesportation per hundred pounds. 



24 



Fron New York to - 





Via 


Via 


Miles 


Freight 


Motor Truck 



Newark 


12 


.91 


.15 


Passaic 


12 


.91 


.18 


Paterson 


18 


.91 


.20 


Elizabeth 


18 


.91 


.20 


New Brunswick 


35 


.91 


.40 


Trenton 


63 


.98 


.60 


Philadelphia 


100 


1.02 


.80 


Chester, Pa. 


110 


1.05 


1.00 


Wilmington, Del. 


127 


1.13 


1.20 


Coatesvllle, Pa. 


130 


1.15 


1.05 


Port Chester, N. Y. 


25 


1.02 


.63 


Greerar/ich, Conn. 


25 


1.02 


.63 


Stamford, Conn. 


34 


1.C3 


.65 


Norwalk, Conn. 


47 


1.06 


.68 


Bridgeport, Conn. 


57 


1.10 


.70 


New Haven, Conn. 


74 


1.13 


.73 


Derby, Conn. 


73 


1.13 


.73 


Ansonla, Conn. 


75 


1.13 


.73 


Shelton, Conn. 


73 


1.13 


.73 


Naugatuck, Conn. 


86 


1.15 


.74 


Waterbury, Corjn. 


92 


1.16 


.75 


Meriden, Conn. 


96 


1.16 


.75 


Hartford, Conn. 


109 


1.21 


.90 


Springfield, Mass. 


150 


1.25 


1.00 


Holyoke, Maas. 


155 


1.25 


1.10 


Worcester, Mass. 
Boston, Mass. 


183 

233 


1.31 

1.36 


1.50 

1.50 


Providence, R. I. 


185 


1.32 


1.10 



Mileage figures supplied By the writer. 



24 Reeves, Alfred. S^ Good Reasons ^ Motor Transportation is so Successful, 
p. 16. National Automohile Chamher of Commerce Puhlication. 



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It will "be noticed that as the truck travels south from Hew York City 
towards Wilmington, Delaware, at a point somewhere "between 110 and 127 miles it 
becomes cheaper to ship by railroad than by freight. In operating northwest from 
New York City towards Worcester, Mass., or Providence, Hhode Island, that point is 
reached some place between 155 to 185 miles distance from the City. 

The Commercial and Financial Chronicle has used a part of Mr. Banham's 
figures, but has added a column of express rates. The table as published in the 
Commercial and Financial Chronicle is as follows (not including the mileage 
column which has been added by the writer). 

COMPARATIVE CHARGES PER HUNDREDWEIGHT 



New York to - 


Miles 


Rail 

Freight 


Express 


Motor Truck 


Newark 


12 


$ .91 


$ .97 


$ .15 


Philadelphia 


100 


1.02 


1.45 


T 

.80 


Wilmington 


127 


1.13 


1.45 


1.20 


Providence 


185 


1.32 


1.59 


1.10 


Worcester 


183 


1.31 


1.59 


1.50 


Bos ton 


233 


1.36 


1.69 


1.50 



It will be seen that the truck is more economical than the express even 
up to at least 233 miles as shown by this table. 



Similar tables have been conpiled for the National Automobile Chamber 
of Commerce by Francis W. Davis of Buffalo, New York, showing the costs and time 
of shipping by railroad freight or by motor truck out of Buffalo to various points 
and from various points into New York City. The motor truck rates are those of 
several conpanies that are keeping complete and accurate cost records. 



25 Commercial and Financial Chronicle . Yol. Ill: 1413. Oct. 9, 1920. 






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COMPARISON OF THE COST OF DOOR-TO-DOOE DELIVERY OF FIRST-CLASS 



LESS-THAJT CARLOAD FREIGHT. 



A - From Buffalo to Various Points. 





Distance 


Flat 


Total Cost 


Time by 


Truck Rate 


Time by 




(Miles) 


Freight 


by Rail 


Freight 


per 100 


Tiruck 






Rates 


per 100 lbs. 


(hours) 


lbs. 


(hours) 


Buffalo to- 














Tonawanda 


10 


25$^. 


$ .83 


48 


$ .25 


2 


Niagra Falls 


26 


28c. 


.87 


48 


.35 


4 


Batavia 


37 


31c. 


.90 


48 


.60 


5 


Rochester 


72 


38c. 


.99 


12 


.80 


9 


Jamestown 


77 


54c. 


1.17 


48 


.90 


9 


Erie 


92 


59c. 


1.23 


48 


1.00 


10 


Ashtabula 


129 


67c. 


1.32 


72 


1.30 


14 


Elmira 


145 


61c. 


1.25 


96 


1.40 


15 


Syracuse 


154 


56c. 


1.20 


48 


1.50 


16 


Utica 


203 


66c. 


1.31 


72 


2,00 


21 


Binghamton 


204 


70c. 


1.36 


72 


2.00 


21 


Pittsburg 


241 


84c. 


1.52 


120 


2.50 


26 


Albany 


308 


72c. 


1.38 


96 


3.00 


31 




B 


- From Various Points 


to New York 


City 






Distance 


Flat 


Total Cost 


Time by 


Truck Rate 


Time by 




(Miles) 


Freight 


by Rail 


Freight 


per 100 


Truck 


To New York City 


from- 


Rates 


per 100 lbs. 


(houars) 


lbs. 


(hoTirs) 



New Rochelle 17 
Stajnford,Conn. 34 
Bridgeport, Conn. 57 
New Haven, Conn, 74 
Hartford, Conn, 109 
New London, Conn. 127 

Springfield, Mass. 150 
Providence, R. I. 185 
Gloucester, Mass. 201 
Fall River, Mass, 220 
Boston, Mass. 233 
Lowell , Mass , 259 



42c. 


$1.03 


24 


$ .25 


3 


48c. 


1.10 


24 


.60 


7 


56c. 


1.20 


48 


.75 


63c. 


1.28 


120 


1.10 


12 

B-h 


59c. 


1.23 


48 


.80 


70c, 


1.36 


120 


1.30 


14 


63c. 


1.28 


168 


1.50 


16 


74c. 


1.41 


96 


1.90 


20 


85c. 


1.54 


168 


2.00 


21 


74c. 


1.41 


120 


2.20 


23 


74c. 


1.41 


96 


2.40 


25 


79c. 


1.46 


168 


2.60 


27 


rail per 


100 lbs. 


equals freight 


rate plus teaming 





charges at both ends (30 cents), plus cost of extra boxing (24c.), plus extra 
freight charge on increased weight of boxing (17^ of freight rate). 

Loading and unloading time of one hour, plus running time at 10 miles 

per hour. 




i 



66 



Figuree "by Francis W. Davis, Buffalo, New York.^® 

Referring to Table A it will be seen that at some point between 129 
and 145 miles distance from Buffalo it becomes cheaper to ship by rail than by 
motor truck. Again, in Table B, towns farther away from New York City than a 
point some where between 127 and 150 miles distance can ship into the city cheaper 
by rail than by motor truck. 

The following graph, which is based on figures obtained from the Fire- 
stone Ship-by-Truck Bureau, illustrates another specific route. Varying con- 
ditions wfeich would be met on other routes would change somewhat the figures on 
which this graph is based, but the general direction of the lines would not change 
The distances shown are highway mileages, 

Mr. Farr, Director of the Bureau, in speaking of the cost figures, 
says: ”lfhile it is true that some of the trucking costs are estimations, they are 

based on the actual experience of responsible and long established commercial 
haulers and it is believed that they are conservative. It is assumed that all 
hauling is done with five- ton trucks carrying a payload both ways and that there 
is no delay in securing a return load. An average of over one hundred five- ton 
trucks in actual operation showed an overhead of $10.27 per day each and an 
operating cost of 45,65 cents per mile, vdiich Includes depreciation and mainten- 
ance. To arrive at a method of including overhead, it is assumed that a truck 
can operate a maximum of 125 miles per day. Cargo insurance is included in 
trucking costs, based on a limited liability on the part of the carrier of $25 
per cwt., using an insurance rate of 11^ per $100 valuation up to 200 miles and 
one cent for each additional 50 miles or fraction thereof, at which rate complete 
coverage may be had.”^*^ 

26 National Motor Truck Comnittee. Motor Transuort Cuts Time and Cost of Ship- 
£ing in New England , p. 2, National Automobile Chamber of Commerce, 366 
Madison Ave., New York. 

27 Firestone Tire and Rubber Co., Akron, Ohio. Firestone Ship-by-Truck Bureau. 
^ Motor Truck Terminal , p, 20. (its Bulletin No. 7.) 






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67 



Instead of "beginning at zero all the lines have been started at zero 
miles with an estimated terminal cost. The express line begins with a terminal 
cost of 30 cents and ends at Chicago with a rate of $1.94 per cwt. The freight 
line, commencing with a terminal cost of 20 cents, shows the first class freight 
rates to the same points and ends at Chicago with a rate of 89^ cents per cwt. 

The motor tmck line shows the cost per cwt. to an Individual operator, Tn«Vi -n g a, 
continaous nan, based on the equipment, labor and eoqsense necessary to mg.yA round 
trips from Cincinnati to points at intervals of 25 miles. The line starts with 
a terminal cost of 2-3/4 cents, which represents cargo Insurance only. 

The motor truck rate 1s much lower at the start than the freight rate 
and does not equal it until a distance of 108 miles is reached. However, it 
must be noted that there is a marked inconsistency in the freight rate line which, 
if eliminated, would cause the truck and frei^t lines to cross at a point between 
80 and 85 miles from Cincinnati. At a distance of 275 miles the truck line 
crosses the egress line and from there on continuous-run trucking becomes in- 
creasingly more expensive than railway express. 

It is evident from these exaii^iles, that under the most favorable 
present conditions, the maximum limit of economic truck operation seems to be 
around 150 or possibly 175 miles. 










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68 



THE MOTOR TRUCK MD THE RAILROAD. 

Attention must again 136 called to the fact that the truclss considered 
here are all five- ton trucks operating under almost ideal conditions. They have 
pay loads in both directions, there is no time lost in finding such loads , and, the 
roads are uniformly good. Erora these data it seems that the limit of economic 
truck operation, even under the most favorable conditions, is from 50 to possibly 
150 or even 175 miles; varying, of course, with local conditions. H?honever a 
truck operates over distances greater than these, there is some special advantage, 
usually of short duration, that malces such operation profitable. 

One would hardly dare to say that the limit of economic truck operation 
had been reached. Future developments such as the designing and building of more 
efficient trucks and eiiuipraent; the building of better roads; an increase in 
freight rates, make it possible tliat the limit will be moved up manj'’ miles. How- 
ever, a moment*s reflection will show that such a thing as a trans-cdntinental 
motor frei^t line is out of the question. One freight train, requiring five or 
six men to operate it, can haul 2,500 tons; a truck train of such capacity 
would require an enormous investment in trucks and at least 250 men. In that 
case too, the railroad would be much faster than the truck. 

But in the field of the short-haul the matter is very different. Up 
to 60 or SO miles the railroad runs at a loss, but the truck makes a profit. Be- 
tween there and 150 miles there is competition. The railroad, in this field, 
begins to make money. Nevertheless, the advantage seans to favor the truck up 
to the economic limit, whatever it may be, then it becomes cheaper to ship by rail- 
road freight. In the case of railway express, of course, the truck can compete 
for greater distances. 








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69 



If It were not for the fact that the railroads are equipped to handle 
almost all shipments, it mi^t he economically advisable to turn over all short- 
hauls to the motor truck. For the present, however, the trucking business is in 
its infancy and is not equipped to handle short-hauls on anything like a nation- 
wide basis. The railroads will have to continue to handle unprofitable hauls un- 
til the truck transportation industry is prepared to take over the business; the 
railroads will always remain competitors for business on which they can money 
and they are going to make the Jobs of their agents along their lines dependent 
upon the tonnage these agents secure in their respective towns. 

The motor truck has demonstrated, in many localities, its ability to 
move freight promptly and efficiently. As better roads are built and the truck 
transportation industry develops and as the efficiency of the railroads increases, 
the truck seems destined to become not so much a conpetitor of the railroads as 
an aid and an ally. The truck can take over some of the present day services 
that have proved time wasting and -unprofitable to the railroads and perform them 
more efficiently and more economically. 

Some of the ways in which the motor truck can help the railroads are: 

First, the short branch or feeder lines of light traffic that are so 
-unprofitable to the railroads can be replaced by motor trucks,^® The truck line 
feeders are more flexible and can cover more territory than do the railroad lines. 
The railroad is limited to its tracks while the truck can cover a strip of terri- 
tory several miles wide. It can go into sparcely settled territory and into the 
mountains where the railroads rarely ever go. If necessary the old branch line 

28 The Boston and Maine Railroad has contracted with one or two motor truck lines 
that have been competing with it at various points to discontinue that ser- 
vice and act as feeders to the railroad, - Railway Age . Vol. 71: 927. Hov. 




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roadbed can be turned into a road for truck use.^® 

It is well Imown that on branch lines, particularly at the extreme end 
of 'such lines, .. % the railroad corap>any is usually required to spend a great 
deal of money for a passenger station, freight depot, roundhouse, yards, turn- 
table, water tank, and other terminal facilities the e^qjenses of which, as a rule, 
are far in excess of what the volume of business would warrant. Local pride 
prompts the citizens to request or demand that the buildings be of a character 
that will conform to the general style of architecture of the town and, as a rule, 
they are much larger than should be required for the volume of business handled. 

By the use of motor trucks the terminal facilities would practically 
consist of what might be called a garage for the trucks with a very limited 
amount of labor employed. This would consist of a mechanic or two. The depot 
facilities could be very limited, for it could easily be arranged to deliver 
passengers and freight within a reasonable radius of the center of the town, 
possibly providing a slight extra charge where the residence or point of delivery 
was some considerable distance from the station. This would materially reduce 
tne e^qpenses on the part of the transportation company and would give the patrons 
much better service. 

Second, the truck seems better adapted to handle the present trap car 
service. In Industrial centers, many industries produce less- than-car load freigh 
for diversified points. This freight is gathered up by cars that are sent around 
through the terminal yards and is then assembled at a central station and con- 

39 An instance of the use of this arrangement may be found in the utilization 
of a part of the abandoned Delaware, Lackawanna and Western roadbed by the 
Pen^ylvanla Highway Commission for the State Road between Binghamton, New 
lorjc, and Scranton, Pa. Another instance is the conversion of the old 
Kansas City Southern roadbed for a number of miles northwest of Joplin, Mo. 
into a hard surfaced road. - American Society of Civil Engineers. Proceed-’ 
ing*. Vol. 48: 345. Feb. 1922. ^ 







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71 



solidated for various destinations. The cars must operate on schedule, uflually 
through congested terminal yards and hence they hinder the movement of throiigh 
carload freight. The motor truclcs can gather this freight more cheaply and can 
relieve the congestion in the railroad yards. 

Third, the truck is more economical in the distribution of suburban 
freight. The terminal costs more than absorb the profit on shipments between 
large industrial centers and the surrounding suburbs. 

Fourth, motor trucks make possible the utilization of outlying yards 
instead of yards in congested districts. Uaually as a railroad»s business grows 
it is necessary to build larger railroad yards. As a rule the necessary groxmd 
either can not be obtained in the heart of the city or its cost is so high as to 
be prohibitive. Then, too, ordinances controling smoke, noise, grade crossing, 
etc. make the operation of internal yards expensive. By gathering the freight 
in motor trucks and hauling it to outlying yards a great economy can be effected.^^ 



30 In Cincinnati container cars have been introduced to relieve the terminal con- 
gestion. Demountable truck bodies are loaded and sealed at the various in- 
dustrial plants, then loaded onto trucks and hauled to the yards where a crane 
transfers them from the truck to the railroad car. 

31 In New York City the Erie Railroad has developed its yards over in New Jersey. 
All freight to and from Manhatten Island is handled between these yards and 
the Island by motor truck. - Railway Age . Vol. 72: 233. Jan. 21, 1922. 

”In St. Louis, Mo., with its population of nearly 800,000 people, practical- 
ly all the railroads terminate their freight activities at East St. Louis, and 
all carload and less-than-carload freight, where there is no direct connection 
with an individual industry, is contracted by a trucking corporation which 
provides inland stations and delivers carload freight and truck freight from 
East St. Louis across the Bridge to St. Louis. 

"The tractor and trailer system which is used at this point, delivers car- 
load and less-than-carload freight betv/een the railroad and the consignee on 
inbound and outbound freight. This system takes up the lost motion on the 
motor unit, three trailers being provided for each tractor. The haul at this 
point averages about 2 miles, and the tractor with its three trailers can 
handle about 45 tons of freight per day, at a cost of about 70 cents per ton. 

"As a demonstration of the economy of this method, it might be cited that 
only a short time ago the Pennsylvania Railroad, with an all-rail line connect- 
ion in St. Louis, diverted its freight to this tractor- trailer method of dis- 
tribution." - American Society of Civil Engineers . Proceedings. Vol. 48: 347. 

1932 • 





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It must not be assxuned tlaat the truck is a ”cure-all" for short-haul 
problems. The railroads are not operating at their highest possible efficiency; 
the matter of taxing motor tracks in proportion to their use of the public high- 
ways has not been satisfactorily settled; careless and irresponsible truck 
operators have caused a great deal of ill-feeling and restrictive legislation to 
be built up against the truck transportation industry; and finally, the business 
has not developed in the matters of definite recognized policies, standardized 
methods, regularity and dependability of service, etc, to the point where it is 
able to handle the short-haul business on a universally satisfactory basis. 

As it has been pointed out, between 60 to possibly 80 miles and 150 or 
175 miles there is competition between the railroads and the motor truck. There 
is, however, a tendency on the part of the railroads to lower the first figure 
from 60 or 80 miles down to possibly 40 miles or even leas. The hi^ cost of 
shipping by railroads is largely due to the inefficiency of those roads. If 
they ean increase their efficiency, the railroads will lower the distance a car 
must move before it begins to pay; they will lower their fates and will enter in- 
to keen con^jetition with the truck on shorter hauls. 

One of the principal factors contributing to the inefficiency and car 
congestions with their consequent slow movement of frei^t is the lack of modern 
terminal equipment. It is not at all uncertain that an increase of terminal 
®^^iciency would allow the railroads to parallel many of the advantages now 
credited to the truck. Some of these advantages may be more apparent than real, 
for the reason that with proper termiiml equipment and by the adoption of methods 
of handling freight in containers on freight cars, they may be practically 
eliminated. 

The highest average loading ever attained was 29,1 tons per car in 
1919. It is now proposed to make this thirty tons and it is pointed out by the 





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Hallway Age Magazine that this will be equivalent to adding 50,000 to 75,000 cars 

32 

to the present equipment. 

Fifty-four percent of the freight cars are running en^jty most of the 
time; 36 percent are rmuiing with less than capacity shipments; and 10 percent 
are carrying a capacity load and are working full time.^^ 

Of course, it does no good to load a freight car speedily if it is 
held up in the freight yards in a train of cars that do not move. However, the 
building of terminals that will allow a whole train to be loaded at one time 
possibly with containers such as are used in the Cincinnati terminals would go 
far toward keeping the cars moving. 

In 1918 the average movement per car per day was 24.6 miles; in 1919 
it was 23,1 miles; the greatest car movement ever attained by the railroads was 
26.9 miles in 1916. The railroads have now established certain standards of 
efficiency of operation and one of these is the increase of this average daily 
movement to 30 miles per day, which will be equivalent to adding about 500,000 
cars to the present equipment. This they plan to do by givlr.g all of the shorter 
hauls, on v/hich they cannot possibly make money, to the motor truck. ^ 

Some other advantages of the truck which have not been mentioned are: 

1. Closed vans, which are locked while the truck is in transit, assure 
the shipper that his merchandise will be received by the consignees. Railroad 
freight cars, while lying in yards awaiting unloading are more or less nnguarded. 

2. Misshipments are eliminated. Merchandise consigned to a certain 
point is placed on a truck bound for that point, so that the shipment cannot be 

misdirected or sent to a foreign point. A misdirected shipment means a delayed 
shipment. 

32 Good goads. New Series Vol. 20: 159. Sept. 29, 1920. 

33 ^iclpa l and County Bigineerlng . Vol. 59: 14. Aug. 1920. 

34 Good Ro^. New Series Vol. 20: 159. Sept. 29, 1920. 












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3. Goods arrive in excellent condition. Merclaandise, especially 
perishable merchandise, snch as beef or produce, rapidly loses much of its market 
value. To command the highest market prices it must be in prime condition. 

Eapid delivery is a very important factor in the handling of such goods, for the 
sooner they can be placed on the market after leaving the point of origin, the 
higher the price they will bring. 

All of these advantages, as well as the advantages of speed, direct 
door-to-door service, labor economy, the saving in packing material, packing 
space, may possibly be eliminated or paralleled by the introduction of modern 
terminal equipment, the use of the container-paclcage car, the use of motorized 
terminals, etc. Local express companies may operate in freight service on the 
railroads as is the case on the Boston and Maine Eailroad. The service there 
furnishes door-to-door service comparable with that provided by the motor truck, 
and the railroad is relieved of all station expense.^® 

The steel conpartments of the container car are loaded and locked at 
the shipper’s place of business; the crating is reduced to a minimum; there is 
no danger from loss when the car is in transit; misshipments are elimimted; 
goods arrive in good order at the door of the receiver; and the service is direct 
from the door of the consignor to that of the consignee, thus eliminating one of 
the strongest advantages credited to the truck lines. 

Of course, many of the advantages of the truck are as yet hardly 
threatened and some of them such as that of flexibility will be hard to eliminate. 
However, the truck operator should not be blind to the developaents in his field 
and to the future trend and outlook of motor transportation. 

He must not forget that as freight rates come down the railroad will 
be cutting down some of his advantage. And rates are coming down; the railroads 



35 Hallway Age. Vol. 71: S27. Nov. 12, 1921. 







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75 



are not going to sit peacefully and allow traffic to "be turned from them to the 
motor truck without putting V¥> a fight. The Boston and Maine Railroad reduced 
rates 40 percent on the 27th of October, 1931. Mr, Gerrit Fort, in speaking of 
this reduction said, ”the recent action of our road in reducing freight rates to 
meet automobile con^etition has thus far proved encouraging. ... We have made 
and will continue to make other rate reductions on specific traffic where it 
appears that we can successfully compete with the trucks and get back a new dollar 
for an old one. The terminal expense constitutes the most important item in 
the cost of handling traffic on the Boston and Maine, and there is some doubt 

whether the burden of terminal charges is equitably distributed between carload 
freight."®® 

This gives an idea of what the railroads will attenpt in order to meet 
truck competition. They will reduce rates if they can prove their point before 
the Interstate Commerce Commission. They will redistribute the terminal charges; 
so the carload shipments will carry more of the burden and the lass- than-car load 
shipments less. It must be remembered that they are taking action only on goods 
that motor trucks can successfully handle. The truck cannot as a rule handle | 

goods that are not first class. It cannot compete in the field of carload ship- i 

I 

ments. The railroads will increase their ability to compete with the truck in 
first class, less-than-carload shipments and increase the charges on the carload 
freight— where there is no truck conpetition. 

Ihen again, it is possible that the railroads will attempt to have the 
minimum weight for which carload rates may be obtained reduced. If it is now 
necessary to have 12,000 pounds of a given commodity in order to secure the car- 
load rate, it may then be necessary to offer only 8,000 pounds to get such a rate. 
36 Railway Vol.71: 927. Nov. 12, 1921. 




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76 



The Interstate Conmerce Cornmlssion must, of coarse, sanction all such 
actions, hut it is not al all improhahle that the railroads will he ahle to 
accoinplish some things along these lines, 

THE MAINTENANCE-OF-WAY OR MOTOR TRUCE TAXATION PROBLM. 

Not only are the railroads entering into keener con^etition with the 
trucks, hut they, as well as many of the general tax payers, are insisting that 
the truck operators pay a tax in proportion to the cost of the highways over 
which they operate. The railroads have to pay for "maintenance-of-way” and they 
are asking that their competitors he compelled to do likewise. The tax payers 
P®y for the roads and the trucks use them. The railroads are heavy tax payers 
and a large part of their money is put into roads over which their coo^etitors, 
the tracks, operate. 

It seems a hit like irony for the conventions of road builders to 
demand that the railroads lower the price of transportation on all materials, 
cement, crushed stone, etc, used to huild highways, when these highways are de- 
signed to make more efficient and economical the use of trucks which are taking 
away the huslneds of the railroads. 

It becomes a question of whether we are going to subsidize the trucks 
as against the railroads and the community at large, or are going to con^el them 
t6 pay their way. 

The relative situation of the motor trucks and the railroads as far 
as taxes are concerned is shown in the following table. These figures come from 
the Secretaries of State, State Highway Commissions, and public officers who 
have the official figures constantly before them. 







V# 



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77 



State 


Amount Appropriated 


Taxes 


Collected from 




for Highway 


Auto Trucks 


Bailroads 




Iii^rovements 1920 


1920 


1920 


Alabama 


4,500,000 


350,000 


(#) 2,000,000 


Arkansas 


16,800,000 


42,000 


263,000 


Diet, of Columbia 


1,430,300 


(#) 28,327 


193,297 


Georgia 


1,905,000 


(#) 420,000 


559,970 


Idaho 


1,000,000 


120,570 


527,150 


Indiana 


5,000,000 


303,339 


(#) 9,452,620 


Iowa 


7,500,000 


449,536 


4,962,946 


Maine 


3,630,000 


82,000 


1,576,087 


Maryland 


3,200,000 


360,387 


1,000,000 


Montana 


3,290,000 


10,000 


3,645,685 


New Jersey 


7,593,166 


(#) 654,283 


10,545,653 


New York 


16,576,144 


2,066,587 


(a) 2,442,471 


Pennsylvania 


30,000,000 


1,415,110 


(a) 10,589,061 


Hhode Island 


1,633,000 


76,617 


102,242 


Texas 


51,903,458 


450,000 


(a) 2,580,000 


Virginia 


5,117,000 


238,828 


2,670,138 


Washington 


4,117,000 


1,138,769 


(a) 6,612,388 


West Virginia 


5,000,000 


150,000 


(a) 3,501,105 


Wisconsin 


2,809,000 


268,180 


6,837,056 


# Estimated 


figures a 


1919 figures. 





The taxes collected from trucks in 1920, ae distinguished from 
licenses for automobiles are not kept separate in Arizona, Connecticut, Mass- 
achusetts, Mississippi, Missouri, Nebraska, Nevada, New Haii^Bhire, North Dakota, 
Oklahoma, South Dakota, Utah, and Vermont. The taxes collected from auto trucks 
are not available in California, Delaware, Florida, Kansas, Kentucky, Louisiana, 
Michigan, Minnesota, New Mexico, North Carolina, Ohio, South Carolina, and Wyoming 
The taxes collected from railroads in 1920 are not available in California, 
Colorado, Delaware, Florida, Illinois, Kansas, Kentucky, Louisiana, Ito,ssachusetts, 
Michigan, Minnesota, New Mexico, North Carolina, North Dakota, Oklahoma, South 
Carolina, Tennessee, and Wyoming. 

Again, some idea of the relation between the taxes paid by the motor 
trucks and the cost of building and maintaining the highways may be had from 



37 Commercial and Financial Chronicle . Vol. 113: 116-18. Sept. 10, 1921. 







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78 



the following figures which were issued in the Fehruary, 1922 Proceedings of the 
American Society of Civil Engineers. 

"During 1921, the money spent on highways in the United States for 
state, county, and other roads outside of cities was: Constfiuction, $420,000,000; 

maintenance, $180,000,000; total $600,000,000. 

"There were 9,750,000 vehicle licenses, that is, 8,404,000 for auto- 
mohiles and 1,346,000 for trucks. If the cost of the road is divided hy the 
number of vehicle licenses, it appears that the total road e^qsenditures for a 
licensed car are as follows: Spent on maintenance per license, $18.60; total 

expenditures per car, license, $61.50, Fixed charges arising from previous con- 
struction are not included. 

"Turning to the other side one may ask what revenue was received from 
the licensed vehicles. During 1921, approximately $118,000,000 were paid for 
vehicle licenses in the United States, and approximately $120,000,000 of excise 
taxes, the latter of which did not go directly hack to the roads, or a total of 
$238,000,000. 

"In a similar manner, one may divide the revenues received hy the 
number of licenses, and find that the revenue per car for license fees was 
approximately $12 per year, and that adding the excise tax the total revenue from 
the car is approximately $19. 

"In other words, the car licenses paid about tv/o- thirds of the cost 
of maintenance of roads. Of course, this showing is likely to be misleading 
because some money is spent on roads over which there is little automobile travel, 
and tnen, again, not all the money paid for license fees is returned to the 
roads. In addition, license fees are received from vehicles that travel almost 
entirely on city streets. One must also remember that large sums of money are 

spent by counties and townships in axcass of revenues received by the State for 
license fees. 



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79 



”It is difficult to examine the calculation for individual states on 

account of diversity of practice in financing. However, proceeding as indicated, 

for the States of Iowa, Michigan, Hew Jersey, Hew York, and Pennsylvania, it is 

found that in 1920 the license fee per car was from $13.10 to $17, or an average 

of $14.53, and that the road expenditure, including construction costs for 1920, 

and maintenance costs, runs from $29.15 to $69, an average of $47.35. 

"As to the ability of the traffic to carry this burden, it may be 

said that the road licenses at present are probably not more than 2 percent of 

the total cost of the transportation, that is, the truck owner or the automobile 

owner pays in road fees only about $2 out of every $100 of fixed charges and 

38 

operating expenses," 

As it is stated in this quotation, the taxes derived from all motor 
vehicles amoiinted to only approximately two- thirds of the cost of maintenance of 
the highways. But in that year the cost of building new highways was more than 
t^vice the cost of maintenance. In other words, the total taxes received from 
all motor vehicles amounted to slightly less than 40 percent of the total cost of 
construction and maintenance of highways during the year 1921, 

These figures, of course, show an average condition for the entire 
United States, In any particular locality the conditions may be far from the 
average. In the State of Massachusetts, for instance, where motor transportation 
has thrived, the average maintenance cost of 700 miles of State highway lias in- 
creased from $100 per mile per year to $1,500 per mile per year durizig the period 
in which motor vehicles have come into general use,^^ 

The public maintains these highways, with the aid, of course, of 
motor vehicle license fees, but the railroad must maintain its right-of-way out 

38 Amei^an Society of Civil Engineers , Proceedings. Vol. 48: 356. Feb. 1922. 

39 Commercial Financial Chronicle . Vol. 113: 116-18. 




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80 



of its earnings. Of course the railroads are objecting to this almost un- 
trammelled freedom of the tiMcks from taxation. 

Contrary to the prevalent idea, the viewpoint of the railroads is not 
that of a few great financiers, but that of millions of the ^erican people, and 
it may be more or less typically summed up as follows; 

"Are not the stock and bond holders of the railroads, the people who 
put their money into this vast transportation machine which consists of 250,000 
miles of railroad and about 404,000 miles of track - invested their money in 
good faith - entitled to say that the motor truck should pay its proportionate 
sliare of taxes? The total book value of the transportation machine is about 
$20,000,000,000 or about $80,000 per mile of road. The capital representing 
this great machine in the hands of the public is about $16,500,000,000 or 
$66,700 per mile of road, 

"The stocks and bonds of American railroads are in the hands of the 
public - are Awned by insurance companies, savings banks, guardians, trustees, 
and by hundreds of thousands of individual investors representing every trade and 
calling. The once more or less prevalent idea that the railroads are owned by 
a few great financiers is erroneous. Everybody loiows that the securities of our 
railroads are scattered all over the country - an investment of the people. The 
Bureau of Railway Economics, in a recent statement, announced tlmt all the owner- 
ship equities of American railroads are really in the hands of more than 50,000,00C 
people, 

"In 1918 there were 53,923,734 life insurance policies in force with 
the legal reserve companies. Among the assets securing these policies were 
nearly $1,700,000,000 of railway securities, 26.25 percent of the total assets, 
and a failure to protect these securities affects directly the holders of these 



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81 



policies and the beneficiaries thereof.”^ 

On the other hand, the motor carriers hold a viewpoint something like 
the following: "The motor truck in the field of the short-haul is the last word 

in efficiency; the present highway constraction will not carry the vehicle which 
is operating over it; the public has jumped to the conclusion that the cost of 
the construction of highways is due to their use by heavy-duty vehicles, whereas 



investigations have clearly demonstrated that our highways are going to pieces 
singly because they are constructed without reference to the bearing capacity of 
sub-soil, drainage, or the constraction of the proper foundations; the legis- 
latures have determined that the heavy truck is the cause of the breakdown of the 
roads, and, therefore, it is self-evident that they are going to legislate against 
the use of that truck; whereas, if they have elementary knowledge of the im- 
portance of transportation they will attempt to shape constructive legislation for 
the improvement of the highways. The public is most benefited by good roads 
and increased motor truck traffic, and taxation which tends to restrict the num- 



ber of trucks used, or burden with overhead charges trucks in operation, defeats 
the very object of good roads - the establishment and maintenance of a fluid 
commerce between all sections of a state. Taxation of trucks increases the cost 
of transporting farm and manufactured products to the consumer, reduces the use of 
trucics by farmers as an aid to production, and inevitably tends toward higher 
prices, No more fallacious panacea for the financial ills of a state has yet 
been produced than this idea of undue taxation of motor transportation on the 
ground that truck owners are favored beneficiaries of good roads. 



C^ommercial and Financial Chronicle . Vol. 113: 116^^118. Feb. 10, 1921. 
Western Society of Engineers . Journal . Vol. 26: 205. I«Iay 25, 1921. 

The White Company, Cleveland. Albatro~ss . Vol. 7: 30. (Its Bulletin No. 50.) 













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82 



In other words, their vie^vpoint seems to he that the hi^ways and motor 
trucks are of such material benefit to the general public that the cost of con- 
struction of the highways should be borne by the public through general taxation. 

Motor truck transportation is subject to the same laws of economics, 
and should be subject to the same system of accounting as railroads and other 
utilities. The heavy-duty motor truck as a method of transportation incident to 
railroad transportation and as a solution of the short-haul problem should be 
limited to specially constructed highways, and as a user of those hi^ways should 
be taxed in proportion to its use of them, in order to maintain them in a con- 
dition which will carry the traffic which moves over them. When the life of the 
highways is determined by motor truck usage, it seems far more equitable to tax 
the motor truck for it, thereby directing the cost through the proper channels 
to the ultimate consumer, than to cover the cost by general taxation, for it can 
readily be seen that such transportation might only benefit a part of the terri- 
tory assessed by a general tax. 

The hostile attitude and persistent doggedness of the railroads and 
members of the general public may bring about the building of such separate roads 
for the use of heavy-duty trucks alone. It would be something of a revival of 
the old toll roads. The trucking companies using the roads would have to pay 
taxes, in proportion to their use of them, sufficient to pay for the building an d 
maintaining of them. The maintenance would include repairs, snow removal, etc. 

If such roads are built, the cost of operating motor trucks would doubtless be 
considerably increased, for the one item of snow removal, according to the 
Good Roads Magazine, in some sections of the country, amo-unte to $60 per year per 
mile, Tiaie, of course, is a minor item compared with other building and main- 
tenance charges. 



43 Gk)od Roads . New Series Vol. 20: 156. Sept. 29, 1920. 




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Finally, in their viewpoint, the motor carriers seem to lose sight 
of traffic congestions and their inconveniences to the public, and evidence of 
a proper understanding of the important relation of the railroad to the prosperity 
of the country seems to be latching. neglecting the cost of construction aind 
maintenance of highways, which cost more per mile than railroads, and even if 
commodities were delivered free of charge by the motor truck, the public must 
still pay a return in some manner on the rail investment if it expects to have 
that service maintained and operated. The return on that investment must be 
sufficient to attract capital to the railroads, otherwise it will be a case of 
dismantling them. 

It seems to be an economic waste to duplicate railroads with motor 
truck freighting in a territory that can be amply served by the rail carrier. 

The motor truck can never displace the railroads for long distance hauling and 
cannot handle carload freiglit as efficiently. Recognizing the necessity of the 
railroads; realizing that the prosperity of the country depends upon railroad 
transportation and considering the difficulties of financing both the railroads 
and the heavy-duty, mo tor- truck roads, thought should be given as to whether there 
is a duplication of transportation systems for the same business, and if so, 
whether it is absurd to assume that in the final accounting there is a saving to 
the consumer in motor truck delivery. 

TEE TREND OF LEGISLATION. 

Because our roads, as a rule, are poorly constructed, and because 
operators overload their trucks so grossly, the cost of building and maintaining 
good roads is almost prohibitive. Many states realize this to be true and are 




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passing laws which will, if encorced, prohibit the use of 5- ton tracks. The 
highway commissioners can hardly be blamed for recoamending the passage of such 
laws, for the truck operators have not been careful in their use of the highways. 
They have been guilty, without question, of damaging dirt roads in driving over 
them in the winter and spring when they are muddy; and of damaging hard surfaced 
roads by hauling excessive loads over them at high speeds.^® 

This action on the part of the operators has caused a great amount of 
ill feeling towards them especially from the men living along the roads who have 
paid for the highway and who have to care for it. These people are against the 
truck; they are anxious for restrictive legislation. It therefore, becomes 
the interest of the truck operator to exercise better judgment and greater care, 
for he must have the good-will and support of these people if his business is to 
develop. Irresponsible operators will not and should not be allowed to continue 
operating over the highways. By overloading their trucks for travel over roads 
not built to carry the extra weight they are destroying a piece of public property 
and are deserving of the severe criticism of the citizens of the community. 

It is probable that regulations governing the operation of trucks over 
dirt roads in v/et weather will be placed in force in the near future and they will 
doubtless be restricted from using many public highways, especially the congested 

46 

city streets. 



44 Good Roads . New Series Vol. 20: 243. Nov. 17, 1920. 

45 The Baltimore-Washington Boulevard in 1S17 was considered a model road. In 

less than five months after the entry of this country into the war, motor 
truclcs, practically all grossly overloaded, pounded it to pieces and it had to 
be rebuilt at great cost. The causes of its failure were: improper con- 

struction and overloaded motor trucks. - Good Roads. New Series Vol. 20* 

243. Nov. 17, 1920. 

Tests made by the Bureau of Public Roads show that a truck traveling at the 
rate of 15 miles per hour exerts twice the force on the road as when traveling 
at the rate of 6 miles per ho\ir. - Commercial and Financial Chronicle. Vol. 

113: 116-18. Sept. 10, 1921. 

46 The County Court of Lane County, Oregon, has issued an order restricting the 
weight of loads to be hauled over the Mohawk Valley Road to 2,000 pounds. This 
road extends frora Eugene to a number of lumbering towns. - Good Roa^s. New 
Series. Vol. 20: 288. Dec. 15. 1920. 





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85 

A great many other restrictions on the use of motor trucks have already 

■been passed “by the legislatures of many states and more will doubtless "be passed. 

Seven states, California, Colorado, Maryland, Uebraska, Pennsylvania, Georgia, 

and Washington have laws placing the motor truck lines under the control of the 

state railway or public utilities commission. California has required that 

trucking companies obtain permits from the state railway commission. Nebrasl® 

has attempted to fix rates. Several states, notably California, Pennsylvania, 

and Maryland, have fixed the weight of motor trucks. The laws imposing weight 

limits for trucks range from 20,000 pounds to 30,000 pounds. It is interesting 

to note here, that the manufacturers of motor vehicles have agreed on a maximum 

weight per unit of 28,000 pounds in order that highway engineers may have some 

basis on which to calculate the necessary capacity of their roads. The three 

states last named have loadometers installed on their principal highways in order 

to test the weight of trucks passing over them. The penalty for overloading is 
49 

severe. 

Most of the states have some type of a speed law. The existing laws 

allow a maximum speed varying from 10 miles per hour in some states to 35 miles 

50 

per hour in others. 

There is a probability that motor truck operators will be required to 

give bond as a protection against and guarantee of responsibility for loss and 

damage to goods intrusted to them for delivery, and another as a guarantee of 

their responsibility for accidents and injuries, 

J^^sstone Tire and Rubber Co., Akron, Ohio. Firestone Ship-by- Truck Bureau. 

— ^Pts_ ^ Motor Track Transportation , p, 7. (Its Bulletin ITo.5.) 

48 McIntyre, Lewis W. Preliminary Topical Outline of the Economics of Hiehwav 

Transport , p. 17. ® 

49 Good Roads . New Series Vol. 20; 288. Dec. 15. 1920. 

50 Ibid. 









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It is evident that there is a wide variety of laws and ordinances 
governing the operation of motor trucks. Experience has amply demonstrated the 
difficulties in the way of operating continuous routes through areas under dif- 
ferent jurisdictions. Eor this reason some uniformity of lavs and centralization 
of highway control is necessary for the most successful inter-state truck trans- 
portation. 

OTHER FACTORS TENMITG TO LIMIT THE DEVELOPIffiNT OF MOTOR TRANSPORTATION. 

In addition to the keener competition from the railroads and the 
tendencies toward more restrictive legislation, the impossibility of maintaining 
regular and dependable service during some seasons of the year, and the short- 
comizigs and unbusinesslike policies and methods of many truck operating companies 
have tended to limit the development of the overlsuid freight trucking business. 

It is desired to direct attention here to additional features which, if in- 
corporated in the business of the motor truck operators, probably would do more 
to place the industry on a par with rail carriers than would any other changes 
which could be made. 

I<Iany trucks run "anywhere, anytime". Merchants and manufacturers 
demand a service they can depend upon. If they are induced to ship their short- 
haul, less- than-car load shipments by truck instead of by rail, and the truck 
service fails a time or two, the chances are they will go back to the railroad 
where they know the service is dependable even if the charges are a little higher. 

As yet, it is next to In^ossible to maintain regular schedules over 
regular routes in some sections of the country. In extreme cases, muddy roads 
may prevent the use of motor trucks for many weeks at a time. Again, in some 
sections, because of the lack of proper facilities for adequate snow removal, 




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87 



trucks may not lae atle to maintain their schedules even over hard-surfaced roads. 

The keeping of adequate cost and operating records and the determina- 
tion of fair rates have previously "been discussed. 

The e:^erience of shippers in many localities where truck lines are 
operating is that a large percentage of such lines are either totally irres- 
ponsible financially or else represent a very nominal responsibility, and, as a 
consequence, have seemingly little protection to offer the shippers against 
possibilities of loss or damage of goods intrusted for delivery. The elimina- 
tion of this troublesome feature is receiving the close attention of many shippers 
at this time. 

A satisfactory bill of lading should be worked out to bind the operator 

to the obligation of a coranon carrier and should set forth the extent of his 

liability very clearly. It should be designed so as to permit the transfer of 

goods from one carrier to another. In addition to the features of the ordinary 

railroad bill of lading, it might include some of the features of the invoice and 

the eaqpense bill so as to obviate the need for a large number of forms for a 

relatively small business. The accompanying form for a Standard Bill of Lading 

is one that has been drawn up by the United States Bureau of Agriculture and is 

51 

offered as a suggestion. It will be noted that it is modeled, in a general 
way, on the ordinary "Uniform Bill of Lading", used by the railroads. Certain im- 
portant changes have been made, however, to conform to the needs of the motor 
transportation business. The form contains certain items not ordinarily in- 
corporated in the regular bill of lading, such as statements of value and shipping 
charges. It should be remembered that laws governing the business of common 

51 U. S. Dept, of Agriculture. Motor Transportation for Rural Districts, 
p. 23. (Its Bulletin No. 770.) 















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Sliippers’ No - 

Agent’s No 



RECEIVED, Subject to tariffs in effect on the date of issue of this original Bill of Lading, the property described below in 
apparent good order except as noted (contents and condition of contents of packages unknown), marked, consigned, and destined as 
indicated below, which said company agrees to carry to its usual place of delivery at said destination. It is mutually agreed, as to each 
carrier of any or all of said property over all or any portion of said route to destination and as to each party at any time interested 
in all or any of said property, that every service to be performed hereunder shall be subject to all the conditions, whether printed or 
written, herein contained (including conditions on back hereof), and which are agreed to by the shipper and accepted for himself 
and his assigns. 



From 



Date, 



- 191 



Address of consignor at 

Consigned to 



-I 



Terminal of this company. 
Store door of consignor 




Strike 

not 



out one 
used. 



Address City of State of 

( Terminal of this company at | I strike out delivery ) 

For delivery to i store door of consignee at ^ desired. f - - 

( Address above given. ) l ; 



Route - - - - -..Truck No, 



No. 

Packages. 


Description of article. 


Value of 
article. 


Weight or bulk subject 
to correction. 


Shipping charges. 


War tax. 


If charges are to be pre- 
paid ivrite or stamp 
here 

“To be Prepaid” 








































Received $ 

to apply in prepayment 
of the charges on the 
property described 
hereon 




















• 


















Agent or Cashier 














If charges are to be col- 
lect, write or stamp 
here 

“Charges (Collect” 








































Where shipment is billed 
C. 0 . D. insert here 
amount to be collected 
on delivery (exclusive 
of shipping charges). 

Collect $ _ . 



























The declared or released value of which is $ 

(If value declared is greater than 50 cents per pound, insurance at the tariff rate in effect to be added to charges.) 



•Shipper - Agent 



Per. 



Per 



(This Bill of Lading to be signed by the shipper and agent of carrier issuing same.) 

(OVER) 



CONDITIONS. 



Section i. The carrier or party in possession of any of the 
property herein described shall be liable for any loss thereof, or 
damage thereto, to the extent of the value declared in this bill 
of lading, except as hereinafter provided. 



No carrier or party in possession of any of the property herein 
described shall be liable for any loss thereof or damage thereto 
or delay caused by the act of God, the public enemy, quarantine, 
or the authority of law, or the act or default of the shipper or 
the owner, or for difference in weights of gram, seed or_ other 
commodities caused by natural shrinkage or discrepancies in 
public weights; and, except in cases of the negligence of this 
company or its agents, it shall not be liable for loss, damage or 
delay occurring while the property is stopped and held in transit 
at the request of the shipper, owner, or party entitled to make 
such requests, or resulting from default or vice in the property, 
or strikes, or the death, injury or escape of live freight. 



Sec. 2. In issuing this bill of lading this company agrees to 
transport only over its own line, and except as otherwise pro- 
vided by law, acts only as agent with respect to the portion of 
the route beyond its own line. 

No carrier shall be liable for loss, damage or injury not occur- 
ring on its own route, or its portion of the through route, nor 
after said property has been delivered to the next carrier, except 
as such liability is or may be imposed by law, but nothing con- 
tained in this bill of lading shall be deemed to exempt the initial 
carrier from any such liability so imposed. 

Sec. 3. No carrier is bound to transport said property by any 
particular truck, or in time for any particular market, or other- 
wise than with reasonable despatch, unless by specific agreement 
endorsed hereon. Every carrier shall have the right in case of 
physical necessity to forward property by any route or means 
between the point of shipment and the point of destination, but 
if such diversion shall be made the liability shall remain as if the 
entire carriage were made by the receiving carrier. 



or in case of failure to make delivery, then within two years 
and one day after a reasonable time for delivery has elapsed. 



Sec. 4. No carrier will carry or be liable in any way for any 
documents, specie or for any articles of extraordinary value 
unless a special agreement to do so and a stipulated value of the 
articles are endorsed hereon. 

Sec. S. Property not removed by the party entitled to receive 
it within forty-eight hours (exclusive of legal holidays) after 
notice of its arrival has been duly sent or given, as regards goods 
consigned to the terminal of the carrier, may be held at such 
terminal subject to a reasonable charge for storage, and the 
liability of this company shall be that of warehousemen only ; or 1 
if such goods are herein consigned for delivery to a specified j 
address other than the terminal of this company, the liability as - 
common carrier shall terminate upon tender for delivery at the 1 
sidewalk or receiving platform of the consignee, and if the goods 
are not accepted on such tender, they shall be returned at the 
expense of the owner to the terminal of this company and held; 
there subject to a reasonable charge for storage, or at the option ! 
of this company removed to and stored in a public or licensed, 
warehouse at the cost of the owner and there held at thct 
owner’s risk and without liability of the carrier and subject to, 
a lien for all freight and other lawful charges, including a 
reasonable charge for storage. 

The carrier may make a reasonable charge for the detention; 
for loading or unloading of any truck for a time in excess of 
thirty minutes exclusive of actual time consumed in such loadings 
or unloading, and may add such charge to all other charges here-| 
under and shall hold such property subject to a lien therefor.j 

i 

Sec. 6. Every party, whether principal or agent, shippin^j 
explosives or other dangerous goods without previous full written, 
disclosure to the carrier of their nature and having the saraej 
expressly endorsed hereon, shall be liable for all loss or damage, 
caused thereby and such goods may be warehoused at owner s| 
risk and expense or destroyed without compensation. I 



In consideration of the value herein declared being used as a 
basis for determining the rate to be charged, the amount of any 
loss or damage for which any carrier is liable shall be computed 
on the basis of such declared value of the property as herein 
stated under this bill of lading, including freight charges if paid. 
Except, in case the actual cash market value of the goods carried 
shall be less than the declared value, then settlement shall be 
made on the basis of actual cash market value on the date of 
shipment, but the shipper shall in no case be entitled, after a false 
declaration of value, to any refund of charges made. 



Sec. 7. The owner, or consignee, shall pay the freight and aU, 
other lawful charges accruing on said property, and if requirrf 
shall pay the same before delivery. If, upon inspection, it is 
ascertained that the articles shipped are not those described m| 
this bill of lading, the transportation charges must be paid upon 
the articles actually shipped. 

If any C. O. D. is not paid within thirty days after notice ol 
non-delivery has been mailed to the shipper, the carrier may, at 
its option, return the property to the consignor. 



Claims for loss, damage or delay must be made in writing to 
the originating or delivering carrier within thirty days after 
delivery of the property, or in case of failure to make delivery, 
then within thirty days after a reasonable time for the_ delivery 
has elapsed ; and suits for loss, damage or delay shall be instituted 
only within two years and one day after delivery of the property. 



Sec. 8. Any alteration, addition, or erasure in this bill ol 
lading which shall be made without an endorsement thereoi 
hereon, signed by the agent of the carrier issuing this bill oi 
lading, shall be without effect, and this bill of lading shall b( 
en forcible according to its original tenor. 



88 



carriers vary in different states and in some cases it may be necessary to modify 
certain provisions of the suggested bill of lading to accord with existing laws. 

The visible assets of the railroad, express company, or boat line offer 
assurance to shippers that the carrier is financially able to settle claims for | 
damage to goods in transit. The small motor truck operator has no such tangible 
evidence of his ability to meet obligations arising out of damages to goods in- 
trusted to his care. Until he can offer protection to his patrons, the motor i 
truck operator must labor under a handicap. One solution of the problem is to 
obtain adequate insurance coverage. Such insurance should be for the full value ' 

I 

I 

of the goods intrusted to the operator; it should cover all ordinary risks; j 

and the premiums should be paid by the operator from the revenues derived from ! 
transportation charges, unless the value of the goods shipped exceeds a set 

I 

maximum. 

A large and responsible organization, which has for some time past 
been devoting much time to the sound development of motor truck transportation, 
says that after almost a year»s negotiations with various ’onderv?riting conpanies 
they have worked out with one of the largest insurance companies a form of policy 

which will give complete protection to the shipper as well as to the truck 
operator. *' 

Other remedies that suggest themselves are: i 

1. The requirement of a satisfactory bond which would guarantee the ! 

I 

payment of loss and daxaage claims, thus protecting any and all shippers using 
the service. Such bor.ds which guarantee the safe carrying of passengers are 
now required of some motor bus companies, especially in mountainous regions such 

52 Highway Engineer and Contractor . Yol. 2: 41. Apr. 1920. 







«V’ 









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89 



as the territory of some of our national parks. 

2. She organization of corporations of sufficient financial strength 
to perform the necessary transportation service for short distances and to pro- 
tect the shippers. Some such companies have heen organized in the larger cities; 
especially in New York and Philadelphia. 

3. The organization of terminal coo^^anies or cooperative associations 
to engage in the transportation of freight hy motor truck. Some such associa- 
tions have already heen organized and are operating more or less successfully. 

The major consideration is the fact that the shipper holds the receipt of a 
responsible company, the terminal conqpany or association, for his goods. The 
individual may or may not he a responsible party. The terminal corr^anj' will, as 
a rule, he a corporation with a rather large paid-in capital and sufficient 
tangible assets to make its receipt respected hy the shipper. The terminal com- 
pany will require cargo insurance to he carried hy commercial haulers operating 
out of the terminal, and Insurance will he carried hy the terminal in cases where 
it operates its own trucks. In the past, in dealing with individual operators, 
the shipper has either heen compelled to search out one of the few operators who 
carry insurance, or to assume the risk himself. The fact that many shippers 
have refused to take either of these alternatives has heen a great factor in 
limiting the tonnage available to the commercial hauling industry. 

As terminals increase, however, there are several tendencies that are 
likely to develop, any one of which may he detrimental to the industry and to 
the community. First, there is the danger that established terminals will 
attempt to cover too large a territory, devoting too much effort to expansion and 
coQ^etition and not enough towards cooperation with other terminals. There is 
likely to he too much duplication of routes. Second, there may he a tendency 
to forget that there is an economic limit to motor truck operation and try to 







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90 



operate over longer distances. 

Nevertheless, the terminals will increase and should increase, for 
their advantages far outweigh their disadvantages and if intelligent cooperation 
is practiced between the managers, these troubles will not develop to an extensive 
degree. As long as the motor truck industry is composed of a multitude of in- 
dividuals, operating on the uneconomic, "anywhere, anytime" principle, the in- 
dustry cannot develop properly. 

It is interesting to note at this point that as the industry develops 
its organization, routes, and terminals there is a tendency for the laborers em- 
ployed on the truck lines to organize into labor unions. At the present time 
there are unions among the chauffeurs, and it is possible that as the motor trans- 
portation industry grows these labor organisations will grow into strong national 
organizations . At such a time it is probable that the wages will be dictated 

by unions; night driving may be restricted and the hours of overtime limited; 
the distance that truckdrivers will drive their trucks may be controlled; and 
otner similar restrictions may be placed on the freedom of the operator. In 
other words, the personnel may become as powerfully organized in the trucking in- 
dustry as it has become in tlie railroad industry. 

Nevertheless, the industry must and doubtless will become better 
organized, and further developed, and with the motor truck terminal separating, 
but, at the same time, coordinating commercial hauling and cartage, there is 
formed a stable and efficient transportation medium, and it may be expected that 
an increasing volume of the short-haul package freight will in the future be 
transported in accordance with the general routing specifications "Ship-by- 
Truck through motor truck terminals". 



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92 



COITCLUSIOIT 

The foregoing diecuesion, although general in its character, has been 
an atteiiipt to bring forth one thought - that under proper conditions, and where 
a fair knowledge of the limitations and difficulties obtains, mo tor truck trans- 
portation promises to play an important part in our national transportation 
scheme. 

Mechanically, the e^eriraental stage for the motor truck has passed. 

Its worth and its efficiency have been demonstrated thoroughly under the most 
trying emergencies. It is the motor transportation business itself that is still 
in the e:Q)erimental stage. Careful planning and good business Judgment are 
necessary to the further development of that Industry. The truck is merely a 
means to an and. If the operator can force himself to consider it as such, and 
will devote himself to a consideration of his business problems, his chances for 
success will increase materially. He must develop better policies and better 
methods . 

It is essential that the motor truck operator keep accurate and com- 
plete cost records not only as an aid in analyzing his business, and as a fair 
basis for rates, but also as a primary source of information needed to guide 
legislators in fomiulating intelligent and constructive laws to govern the 
motor transportation industry. It is essential also that he become more res- 
ponsible not only for the goods intrusted to him for delivery, but also for acci- 
dents and injuries, and for the careful use of the public highways. He must 
realize that because of his irresponsibility a great amount of restrictive legis- 
lation has been passed against him and that more will probably be passed in the 
future. A great deal of ill feeling has developed against him, both from the 
railroads and from the general public. It is his task to build up a good-will 









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93 



for himself and his industry. 

It is not necessary or advisable that a leader in the commercial trans- 
portation industry be ultra-conservative, but he must be farsighted; he must 
analyze and foresee the possibilities and tendencies of the future. He must 
see, for instance, that the railroads are not yet operating at the highest possibl ^ 
efficiency and that they may eventually deprive him of some of his advantage. 

He must see that his trucks have been limited in weight and speed, and that it is 
not iti5)robable that they will be debarred from many of the high\9ays. He must 
realize, sooner than the average operators now seem to realize, that he may be 
deprived of his almost untrammelled freedom from taxation, and maintenance of 

highways; at any rate, he is almost sure to have a greater maintenance-of-way 
charge. 

The motor truck as a common carrier has doubtless come to stay; it 
has its fields of usefulness, TOiether the operator who enters these fields 
will be successful, will, however, depend, as in other lines of business, on his 
initiative, on how minutely and carefully he analyzes his business, on his sense 
of proper business proportions. 

transpor tation as a business is altogether too young to have 
established any hard and fast principles governing its economic operation. 

There is, however, developing the knowledge that the motor truck, although it 
must necessarily compete more or less with the railroad, may operating within 
its field, co-operate with the railroad to provide a greater service to the 
people. It is being recognized, for instance, that the long-haul belongs to 
the railroad on the score of economy, and that in providing transportation of 
more freight to be moved considerable distances, the motor truck brings to the 
railroad a most profitable business. In the sphere of the short-haul, which 

the railroad has been compelled to occupy, the motor truck, in turn, finds a 
















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94 



profitaTjle field that the railroad can, in a large measure, relinquish with ad- 
vantage to itself. 

The length of the short-haul varies according to the conditions in 
different sections of the country. Under the most favorable, present conditions, 
it is generally conceded that the truck's greatest usefulness is over distances 
up to about 150 miles. There are some companies in the field doing business on 
runs greater than this, but, as a rule, trucks operating even up to 150 miles 
operate under some special conditions or advantages that are not always apparent 
to the outsider, and it must not be assumed that this limit can be attained in 
all sections. 

One would hardly dare to say that the ultimate economic limit of 
truck transportation had been reached. There are a number of factors such as 
more efficient trucks, more good roads and lower road costs, higher freight rates, 
and lower operating costs which may increase their range of operation. There 
are, however, such factors as increased railroad operating efficiency, decreased 
freight rates, and increased motor truck taxes that should not be forgotten, and 
will, if they come to pass, lower the range of economic truck operation; that 
is, in competition with railroads. 

As an instrument of economy the motor truck has not yet come into its 

own. Efficient agent as it is in certain restricted territories, it now awaits 

the further development of highways, better business methods, and the education 

of the public to its sphere of usefulness, to reach the measure of its full 

attainment. It has power and speed that put it outside the class of the horse- 

drawn vehicle, and a nimbleness and flexibility superior to that of the railroad. 

We may, therefore, expect to see it assume more and more the function of the 

short-haul as its own particular field, in part, relieving the railroads of those 

duties which they are least able to perform, and, in part, expanding the field 
of our national transportation system. 



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BIBLIOGRAPHY 



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V 



j-- 




99 



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